OO 


GIFT  OF 


SHALL  WE  HAVE  PEACE? 

PEACE  FINANCIAL,  AND  PEACE  POLITICAL? 


*-* 


LETTERS 


TO  THE 


PRESIDENT  ELECT  OF  THE  TIMED  STATES: 


BY 


H.    C.    OAEET. 


PHILADELPHIA: 
COLLINS,    PRINTER,   705    JAYNE    STREET. 

1860. 


'4  * 


H 


SHALL  WE  HAVE  PEACE? 


DEAR  SIR: — 

LET  us  have  peace !  In  these  brief  words  you  express  the  unani- 
mous wish  of  the  lo}^!  portion  of  the  nation,  North  and  South, 
and  of  whatsoever  shade  of  color.  It  is  the  one  great  and  pre- 
ponderant desire  of  all  that  portion  of  our  population  which,  at  the 
close  of  a  tedious  and  destructive  war,  has  now  succeeded  in  placing 
in  the  presidential  chair  the  man  to  whom  they  had  been  most  of 
all  indebted  for  suppression  of  the  armed  rebellion.  That  there 
should  be  peace,  and  that  it  should  be  permanent,  is  to  the  true  in- 
terest of  all,  whether  loyalists  or  rebels,  and  it  is  in  the  interest  of 
all  that  I  now  propound  the  great  question,  Shall  we  have  peace 
— not  a  temporary  one  to  be  maintained  by  aid  of  military  force, 
but  such  a  peace  as  shall  tend,  day  by  day  and  year  by  year,  so  to 
bind  together  and  consolidate  the  different  portions  of  the  Union 
as  to  render  absolutely  impossible  a  recurrence  of  scenes  of  war 
and  waste  like  to  those  through  which  we  so  recently  have  passed  ? 
Can  we  have  such  a  peace  ?  For  answer  to  this  I  have  to  say  that 
such  an  one  has  recently,  and  on  the  largest  scale,  been  established 
in  Central  Europe,  and  that  all  now  needed  among  ourselves  is  that 
we  study  carefully  what  has  there  been  done,  and  then  imitate  the 
great  example  which  has  there  been  set  us. 

Five  and  thirty  years  since,  Germany  presented  to  view  a  collec- 
tion of  loose  fragments,  most  of  which  were  mere  tools  in  the  hands 
of  neighboring  powers,  France  or  England  at  one  hour,  Russia  or 
Austria  at  another.  A  state  of  civil  war  had  for  centuries  been 
the  chronic  condition  of  the  country,  and,  as  a  necessary  conse- 
quence, poverty,  and  such  poverty  as  in  our  loyal  States  is  entirely 
unknown,  had,  with  but  few  exceptions,  been  the  condition  of  all 
classes  of  her  people. 

Brief  as  is  the  period  which  has  since  elapsed,  an  empire  has  been 
there  created  embracing  a  population  little  short  of  40.000,000, 
among  whom  education  is  universal ;  with  a  system  of  communica- 
tions that,  with  the  exception  of  those  provided  for  the  very  dense 
populations  and  limited  territories  of  England  and  Belgium,  is  not 
excelled  by  that  of  any  other  country ;  with  an  internal  commerce 
as  perfectly  organized  as  any  in  the  world,  and  growing  from  day 
to  day  with  extraordinary  rapiditj" ;  with  a  market  on  the  land  for 
nearly  all  its  products,  and,  as  a  necessary  consequence,  with  an 
agricultural  population  that  grows  daily  in  both  intelligence  and 
power;  with  a  mercantile  marine  that  now  numbers  more  than 
10,000  vessels;  with  a  public  treasury  so  well  provided  that  not 
only  has  it  made  the  recent  war  without  need  for  negotiating  loans, 
but  that  it  has  at  once  made  large  additions  to  the  provision  for 
1 

383254 


public  education ;  and  with  private  treasuries  so  well  supplied  as  to 
enable  its  people  not  only  with  their  own  means  to  build  their  own 
furnaces  and  factories  and  construct  their  own  roads,  but  also  to 
furnish  hundreds  of  millions  to  the  improvident  people  of  America, 
to  be  by  them  applied  to  the  making  of  roads  in  a  country  the 
abundance  of  whose  natural  resources  should  long  since  have  placed 
it  in  the  position  of  money  lender,  rather  than  that  now  occupied 
of  general  money  borrower. 

To  what  now,  has  this  all  been  due?  To  the  quiet  and  simple 
operation  of  the  protective  features  of  the  system  of  the  Zoll-Yerein, 
the  most  important  measure  of  the  century,  and  among  the  most 
important  ever  adopted  in  Europe.  Under  it  labor  has  been  every- 
where economized.  Under  it,  the  producers  and  consumers  of  a 
whole  nation  have  been  brought  into  communication  with  each 
other,  and  thus  has  been  created  a  great  society  which  is  destined 
ultimately,  in  all  probability,  to  produce  etfects  throughout  the 
Eastern  continent  fully  equal  to  any  that  may,  by  even  the  most 
sanguine,  be  hoped  for  in  this  "Western  one. 

§  2.  Five  and  thirty  years  since,  Germany  and  the  American  Union 
exhibited  states  of  things  directly  antagonistic,  the  one  to  the  other. 
The  first  was  divided  and  disturbed,  its  internal  commerce  in  every 
way  embarrass^!,  its  people  and  its  various  governments  very  poor, 
and  with  little^iope  in  the  future  except  that  which  resulted  from 
the  fact  that  negotiations  were  then  on  foot  for  the  formation  of  a 
Customs  Union,  which,  shortly  after,  was  accomplished.  In  the 
other,  on  the  contrary,  everything  was  different,  the  internal  com- 
merce having  been  more  active  than  had  ever  before  been  known, 
the  public  treasury  filled  to  overflowing,  the  national  debt  on  the 
eve  of  extinction,  and  capital  so  much  abounding  as  to  make 
demand,  for  the  opening  of  mines,  the  building  of  houses  and  mills, 
and  the  construction  of  roads,  for  all  the  labor  power  of  a  people 
that  then  numbered  thirteen  millions. 

The  cause  of  these  remarkable  differences  was  to  be  found  in  the 
facts,  that,  up  to  that  time,  Germany  had  wholly  failed  to  adopt 
such-  measures  of  co-ordination  as  were  needed  for  establishing 
circulation  among  its  30,000,000  of  population ;  whereas,  our 
Union  had,  five  years  before,  and  for  the  first  time,  adopted 
measures  having  for  their  object  development  of  all  the  powers, 
physical,  mental,  or  moral,  of  its  people,  all  the  wealth  of  its  soil, 
and  all  the  wonderful  mineral  deposits  by  which  that  soil  was 
known  to  be  underlaid.  The  one  had  failed  to  bring  together  the 
producer  and  consumer  of  food  and  wool,  and  had  remained  de- 
pendent upon  traders  in  distant  markets.  The  other  had  just  then 
willed  that  such  dependence  should,  at  no  distant  time,  come  to  an 
end ;  that  producers  and  consumers  should  be  brought  together ; 
and  there  had  thence  already  resulted  an  activity  of  circulation  and 
an  improvement  in  physical  and  moral  condition,  the  like  of  which 
had  never  before  been  known  to  be  accomplished  in  so  brief  a 
period. 

But  little  later  (1835),  the  two  countries  are  once  again  found 
totally  opposed,  Germany  having  adopted  the  American  system 
and  thus  provided  for  freedom  of  internal  commerce,  America 


simultaneously  adopting  that  which  to  Germany  had  proved  so 
utterly  disastrous,  and  which  had  been  there  rejected.  Thenceforth 
the  former  moved  steadily  forward  in  the  direction  of  creating  a 
great  domestic  commerce,  doing  this  by  means  of  a  railroad  system 
which  should  so  bind  together  her  whole  people  as  to  forbid  the 
idea  of  future  separation.  The  result  already  exhibits  itself  in  the 
quiet  creation  of  the  most  powerful  empire  of  Europe.  The  latter 
meanwhile  has  constructed  great  roads  by  means  of  which  it  has 
exported  its  soil,  in  the  forms  of  tobacco,  corn,  and  cotton,  to 
distant  markets,  and  has  thus  diminished  its  power  to  maintain  in- 
ternal commerce — the  result  obtained  exhibiting  itself  in  a  great 
rebellion  that  has  cost  the  country,  North  and  South,  half  a  million 
of  lives,  the  crippling  of  hundreds  of  thousands  of  men,  and  an  ex- 
penditure of  more  thousands  of  millions  than,  properly  applied, 
would  have  doubled  the  incomes  of  its  whole  people,  while  making 
such  demand  for  human  force,  mental,  moral,  and  physical,  as  would, 
in  a  brief  period,  have  secured  the  establishment  of  universal  free- 
dom, with  benefit  to  all,  white  and  black,  landowner  and  laborer. 
Such  have  been  the  widely  different  results  of  two  systems  of  public 
policy,  the  one  of  which  looks  to  introducing  into  society  that  proper, 
orderly  arrangement  which  is  found  in  every  well  conducted  private 
establishment,  and  by  means  of  which  each  and  every  person  em- 
ployed is  enabled  to  find  the  place  for  which  nature  had  intended 
him  ;  the  other,  meanwhile,  in  accordance  with  the  doctrine  oflaisser 
faire,  requiring  that  government  should  abdicate  the  performance 
of  its  proper  duties,  wholly  overlooking  the  fact  that  all  the  com- 
munities by  which  such  teachings  are  carried  into  practical  effect 
now  exhibit  themselves  before  the  world  in  a  state  of  utter  ruin. 

§  3.  Studying  now  our  American  railroad  system,  we  find  the  great 
trunk  lines  to  be,  so  far  as  regards  the  North  and  the  South,  purely 
sectional,  all  of  them  running  east  and  west  and  the  whole  constitut- 
ing a  collection  of  spokes  in  a  great  wheel  whose  hub,  wholly  con- 
trolled by  men  like  Laird  and  other  workers  in  aid  of  the  great 
rebellion,  is  found  in  Liverpool.  As  a  consequence  of  this  it  had 
been  that  our  dependence  on  such  men  had  become  more  complete 
as  those  great  lines  had  increased  in  number,  and  with  every  such 
increase  our  financial  crises  had  become  more  frequent  and  more 
severe.  Prior  to  the  war  a  single  turn  of  the  British  screw  had 
sufficed  for  ruining  thousands  of  those  who  had  invested  their  means 
in  the  opening  of  mines,  the  building  of  furnaces  or  factories,  and 
for  thus  crushing  out  the  most  important  portions  of  our  domestic 
commerce.  With  each  such  crisis  there  came  increased  necessity  for 
scattering  our  people  over  the  land,  and  for  limiting  ourselves  to  that 
single  species  of  employment  which  is  the  essential  characteristic  of 
semi-barbarism — the  raising  of  raw  produce  for  the  supply  of  distant 
markets.  From  year  to  year  the  tide  of  white  emigration  rose,  fol- 
lowing always  the  lines  of  road  and  canal  of  the  extreme  North,  and 
carefully  avoiding  the  Central  States.  Simultaneously,  south  of 
Mason  and  Dixon's  line,  a  black  emigration  depleted  the  Centre, 
Virginia  and  Kentucky,  Maryland  and  Delaware,  furnishing  the 
bone  and  the  muscle  required  for  consumption  in  the  fields  of 
Mississippi  and  of  Texas.  As  a  consequence  of  this,  the  extreme 


public  education ;  and  with  private  treasuries  so  well  supplied  as  to 
enable  its  people  not  only  with  their  own  means  to  build  their  own 
furnaces  and  factories  and  construct  their  own  roads,  but  also  to 
furnish  hundreds  of  millions  to  the  improvident  people  of  America, 
to  be  by  them  applied  to  the  making  of  roads  in  a  country  the 
abundance  of  whose  natural  resources  should  long  since  have  placed 
it  in  the  position  of  money  lender,  rather  than  that  now  occupied 
of  general  money  borrower. 

To  what  now,  has  this  all  been  due?  To  the  quiet  and  simple 
operation  of  the  protective  features  of  the  system  of  the  Zoll-Yerein, 
the  most  important  measure  of  the  century,  and  among  the  most 
important  ever  adopted  in  Europe.  Under  it  labor  has  been  every- 
where economized.  Under  it,  the  producers  and  consumers  of  a 
whole  nation  have  been  brought  into  communication  with  each 
other,  and  thus  has  been  created  a  great  society  which  is  destined 
ultimately,  in  all  probability,  to  produce  etfects  throughout  the 
Eastern  continent  fully  equal  to  any  that  may,  by  even  the  most 
sanguine,  be  hoped  for  in  this  Western  one. 

§  2.  Five  and  thirty  years  since,  Germany  and  the  American  Union 
exhibited  states  of  things  directly  antagonistic,  the  one  to  the  other. 
The  first  was  divided  and  disturbed,  its  internal  commerce  in  every 
way  embarrassed,  its  people  and  its  various  governments  very  poor, 
and  with  little^iope  in  the  future  except  that  which  resulted  from 
the  fact  that  negotiations  were  then  on  foot  for  the  formation  of  a 
Customs  Union,  which,  shortly  after,  was  accomplished.  In  the 
other,  on  the  contrary,  everything  was  different,  the  internal  com- 
merce having  been  more  active  than  had  ever  before  been  known, 
the  public  treasury  filled  to  overflowing,  the  national  debt  on  the 
eve  of  extinction,  and  capital  so  much  abounding  as  to  make 
demand,  for  the  opening  of  mines,  the  building  of  houses  and  mills, 
and  the  construction  of  roads,  for  all  the  labor  power  of  a  people 
that  then  numbered  thirteen  millions. 

The  cause  of  these  remarkable  differences  wras  to  be  found  in  the 
facts,  that,  up  to  that  time,  Germany  had  wholly  failed  to  adopt 
such-  measures  of  co-ordination  as  were  needed  for  establishing 
circulation  among  its  30,000,000  of  population ;  whereas,  our 
Union  had,  five  years  before,  and  for  the  first  time,  adopted 
measures  having  for  their  object  development  of  all  the  powers, 
physical,  mental,  or  moral,  of  its  people,  all  the  wealth  of  its  soil, 
and  all  the  wonderful  mineral  deposits  by  which  that  soil  was 
known  to  be  underlaid.  The  one  had  failed  to  bring  together  the 
producer  and  consumer  of  food  and  wool,  and  had  remained  de- 
pendent upon  traders  in  distant  markets.  The  other  had  just  then 
willed  that  such  dependence  should,  at  no  distant  time,  come  to  an 
end ;  that  producers  and  consumers  should  be  brought  together ; 
and  there  had  thence  already  resulted  an  activity  of  circulation  and 
an  improvement  in  physical  and  moral  condition,  the  like  of  which 
had  never  before  been  known  to  be  accomplished  in  so  brief  a 
period. 

But  little  later  (1835),  the  two  countries  are  once  again  found 
totally  opposed,  Germany  having  adopted  the  American  system 
and  thus  provided  for  freedom  of  internal  commerce,  America 


simultaneously  adopting  that  which  to  Germany  had  proved  so 
utterly  disastrous,  and  which  had  been  there  rejected.  Thenceforth 
the  former  moved  steadily  forward  in  the  direction  of  creating  a 
great  domestic  commerce,  doing  this  by  means  of  a  railroad  system 
which  should  so  bind  together  her  whole  people  as  to  forbid  the 
idea  of  future  separation.  The  result  already  exhibits  itself  in  the 
quiet  creation  of  the  most  powerful  empire  of  Europe.  The  latter 
meanwhile  has  constructed  great  roads  by  means  of  which  it  has 
exported  its  soil,  in  the  forms  of  tobacco,  corn,  and  cotton,  to 
distant  markets,  and  has  thus  diminished  its  power  to  maintain  in- 
ternal commerce — the  result  obtained  exhibiting  itself  in  a  great 
rebellion  that  has  cost  the  country,  North  and  South,  half  a  million 
of  lives,  the  crippling  of  hundreds  of  thousands  of  men,  and  an  ex- 
penditure of  more  thousands  of  millions  than,  properly  applied, 
would  have  doubled  the  incomes  of  its  whole  people,  while  making 
such  demand  for  human  force,  mental,  moral,  and  physical,  as  would, 
in  a  brief  period,  have  secured  the  establishment  of  universal  free- 
dom, with  benefit  to  all,  white  and  black,  landowner  and  laborer. 
Such  have  been  the  widely  different  results  of  two  systems  of  public 
policy,  the  one  of  which  looks  to  introducing  into  society  that  proper, 
orderly  arrangement  which  is  found  in  every  well  conducted  private 
establishment,  and  by  means  of  which  each  and  every  person  em- 
ployed is  enabled  to  find  the  place  for  which  nature  had  intended 
him  ;  the  other,  meanwhile,  in  accordance  with  the  doctrine  oflaisser 
faire,  requiring  that  government  should  abdicate  the  performance 
of  its  proper  duties,  wholly  overlooking  the  fact  that  all  the  com- 
munities by  which  such  teachings  are  carried  into  practical  effect 
now  exhibit  themselves  before  the  world  in  a  state  of  utter  ruin. 

§  3.  Studying  now  our  American  railroad  system,  we  find  the  great 
trunk  lines  to  be,  so  far  as  regards  the  North  and  the  South,  purely 
sectional,  all  of  them  running  east  and  wrest  and  the  whole  constitut- 
ing a  collection  of  spokes  in  a  great  wheel  whose  hub,  wholly  con- 
trolled by  men  like  Laird  and  other  workers  in  aid  of  the  great 
rebellion,  is  found  in  Liverpool.  As  a  consequence  of  this  it  had 
been  that  our  dependence  on  such  men  had  become  more  complete 
as  those  great  lines  had  increased  in  number,  and  with  every  such 
increase  our  financial  crises  had  become  more  frequent  and  more 
severe.  Prior  to  the  war  a  single  turn  of  the  British  screw  had 
sufficed  for  ruining  thousands  of  those  who  had  invested  their  means 
in  the  opening  of  mines,  the  building  of  furnaces  or  factories,  and 
for  thus  crushing  out  the  most  important  portions  of  our  domestic 
commerce.  With  each  such  crisis  there  came  increased  necessity  for 
scattering  our  people  over  the  land,  and  for  limiting  ourselves  to  that 
single  species  of  employment  which  is  the  essential  characteristic  of 
semi-barbarism — the  raising  of  raw  produce  for  the  supply  of  distant 
markets.  From  year  to  year  the  tide  of  white  emigration  rose,  fol- 
lowing always  the  lines  of  road  and  canal  of  the  extreme  North,  and 
carefully  avoiding  the  Central  States.  Simultaneously,  south  of 
Mason  and  Dixon's  line,  a  black  emigration  depleted  the  Centre, 
Virginia  and  Kentucky,  Maryland  and  Delaware,  furnishing  the 
bone  and  the  muscle  required  for  consumption  in  the  fields  of 
Mississippi  and  of  Texas.  As  a  consequence  of  this,  the  extreme 


mines,  in  building  furnaces  or  factories,  by  means  of  which  the  con- 
sumers and  producers  of  the  South  might  be  brought  together. 
Can  they  have  such  aid?  Apparently  they  cannot,  millions  upon 
millions  being  lavished  upon  Eastern  and  Western  roads  which, 
useful  as  they  may  eventually  prove  to  be,  tend  now  to  intensifica- 
tion rather  than  to  obliteration  of  the  sectional  feelings  under 
which  we  have  already  so  greatly  suffered.  Such  roads  need  com- 
paratively little  help  from  government,  Eastern  capitalists  being 
always  ready  for  any  measures  tending  to  bring  trade  to  the  great 
cities,  European  or  American,  of  the  Atlantic  coast.  Northern  and 
Southern  roads — roads  tending  toward  development  of  the  extra- 
ordinary mineral  wealth  of  the  Central  States — roads  tending  to 
enable  the  cotton  of  the  South  to  reach  mills  and  factories  in  the 
West — do  need  it,  and  for  the  reason  that  those  capitalists  are  not 
yet  so  far  enlightened  as  at  all  to  appreciate  the  idea  that  the  larger 
the  domestic  commerce  the  greater  must  be  the  power  to  purchase 
those  finer  commodities  for  which  the  Centre,  the  West,  and  the 
South  are  accustomed  to  look  to  Philadelphia  and  Baltimore,  New 
York  and  Boston. 

An  expenditure  for  such  purposes,  involving  an  annual  demand 
upon  the  Treasury  for  less  than  half  a  dozen  millions,  would  add 
five  times  that  amount  to  the  annual  public  revenue,  while  giving 
to  the  domestic  commerce  a  development  that  would  add  countless 
millions  to  the  money  value  of  labor  and  land,  and  by  promoting 
immigration  from  abroad  would  do  more  for  elevation  of  the 
down-trodden  people  of  the  eastern  continent  than  has  been  done 
by  all  its  sovereigns  from  the  days  of  Charlemagne. 

That  we  may  have  permanent  peace,  and  that  the  desire  of  all 
loyal  men  may  thus  be  realized,  it  is  needed  that  our  people  be 
brought  to  understand  that  between  the  various  portions  of  the 
Union  there  is  a  perfect  harmony  of  real  and  permanent  interests, 
all  profiting  by  measures  looking  to  establishment  of  perfect  politi- 
cal and  industrial  independence,  and  all  suffering  from  those  which 
tend  to  prolong  a  dependence  upon  those  foreign  communities  that 
hailed  with  so  much  joy  the  action  of  the  men  who  initiated  the 
great  rebellion. 

Throughout  the  world  the  tendency  towards  peace,  freedom,  and 
independence  has  grown  as  consumers  and  producers  have  been 
brought  more  nearly  together,  as  the  societary  circulation  has  be- 
come more  rapid,  and  as  land  and  labor  have  become  more  pro- 
ductive. That  peace  may  be  here  maintained — that  all  may  really 
enjoy  equality  of  rights — that  the  Union  may  be  perpetuated — and, 
that  the  country  may  enjoy  a  real  independence — we  must  have  a 
system  that  shall  tend  towards  enabling  our  whole  people  to  make 
their  exchanges  with  each  other  freed  from  the  interference  of  foreign 
ships,  or  foreign  merchants. 

In  another  letter  I  propose  to  show  the  bearing  of  the  measures 
above  proposed  upon  the  condition  of  the  recently  enfranchised 
people  of  the  south,  and  through  them  on  the  Union  at  large,  mean- 
while remaining,  with  great  regard  and  respect, 

Yours ,  truly, 

GEN.  U.  S.  GRANT.  HENRY  C.  CAREY. 

PHILADELPHIA,  November  5,  1868. 


LETTER  SECOND. 
DEAR  SIR: 

Little  more  than  sixty  years  since  the  German  people  were  in 
a  condition  so  nearly  akin  to  slavery  that  the  chief  difference 
between  them  and  the  colored  people  of  our  Southern  States  con- 
sisted in  the  fact,  that  while  these  latter  could,  the  former  could  not, 
be  sold  at  the  horse  block  like  other  chattels.  On  the  other  hand, 
while  the  American  slave  had  a  positive  money  value  that  made  it 
desirable  to  grant  protection  to  children  in  their  infancy,  and  to 
men  and  women  in  their  age,  the  Germans  had  no  such  value 
except  when,  as  with  the  Hessian  sovereign  of  our  Revolution, 
their  masters  could  find  opportunities  for  selling  them  by  regiments 
as  food  for  powder.  Badly  fed,  badly  clothed,  wretchedly  poor, 
and  with  no  poor-laws  by  aid  of  which  they  might  be  enabled  to 
demand  assistance  in  case  of  illness,  few,  very  few  indeed,  could 
command  even  the  trifling  means  required  for  enabling  them  to  seek 
abroad  the  subsistence  denied  to  their  families  and  themselves  at 
home.  Some  few  did  then  occasionally  cross  the  Atlantic,  but  most 
generally  as  "redemptioners,"  liable  to  sale  in  open  market  for  as 
many  years  of  service  as  were  then  required  for  payment  of  their 
passages. 

Such  was  the  state  of  things  throughout  Germany  when  the 
disastrous  campaign  of  Jena  (180G),  closely  succeeding  that  of 
Ulm  (1805),  followed  as  it  was  by  the  almost  entire  subjugation  by 
France  of  the  German  people,  first  awakened  Prussian  statesmen 
to  an  appreciation  of  the  fact  that  if  Prussia  would  ever  resume 
her  place  in  the  family  of  nations  she  must  look  to  the  elevation 
of  her  whole  people,  and  bring  to  a  close  her  dependence  on  an 
effete  landed  aristocracy  whose  utter  worthlessness  had  so  recently 
been  entirely  proved.  Prompt  and  energetic,  the  great  man  (Baron 
Stein)  who  then  stood  in  the  lead  of  Prussia,  found  himself  before 
the  close  of  another  year  prepared  to  announce  arrangements  by 
means  of  which  the  land  was  to  become  divided  between  those  who 
theretofore  had  held  it  as  property,  and  those  by  whom  it  had  been 
cultivated,  these  latter  passing  at  once  from  the  condition  of  mere 
tenants  at  will  to  that  of  free  proprietors.  Thenceforth  the  Prus- 
sian peasant  stood  before  the  world  as  a  freeman,  and  the  effect  of 
this  was  fully  shown  when,  but  a  few  years  later,  the  Sovereign 
found  it  necessary  to  call  to  his  aid  the  whole  body  of  his  people 
for  expulsion  of  the  French,  and  for  liberation  of  that  which  then 
had  become  for  them  really  a  Fatherland. 

The  years  which  followed  that  expulsion  were,  however,  years  of 
British  free  trade,  sad  and  sorrowful  years,  in  the  course  of  which 
there  was  little  demand  for  German  labor  except  so  far  as  it  was 
needed  for  that  work  of  barbarism,  the  raising  of  raw  produce  for 
consumption  in  distant  markets ;  years  in  which  wool,  rags,  and 


8 

wheat  went  abroad  to  be  exchanged  for  other  wool,  rags,  and 
wheat,  converted  by  foreign  labor  into  cloth,  paper,  and  iron ;  years 
in  which  there  was  furnished  daily  evidence  that  poverty  of  the 
people  and  weakness  of  the  government  grew  with  every  increase 
of  distance  between  the  producers  and  consumers  of  a  nation. 
Nominally,  the  Prussian  people  had  become  free,  but  practically 
they  were  so  entirely  under  the  control  of  foreign  traders  that  they 
profited  little  of  that  freedom. 

Sad  experience  having  soon  and  thoroughly  satisfied  Prussian 
statesmen  of  the  absolute  necessity  for  bringing  consumers  to  the 
side  of  producers,  and  thus  relieving  fanners  from  the  burdensome 
and  oppressive  tax  of  transportation,  the  year  1818  witnessed  the 
establishment  of  a  tariff  that  was  thoroughly  protective,  and  that 
looked  to  the  establishment  of  a  great  domestic  commerce.  Not 
content,  however,  with  the  slight  step  which  had  thus -been  made, 
they  in  the  years  that  followed  -spared  no  efforts  for  bringing 
about  an  union  of  the  various  States  of  Germany  on  the  footing 
of  an  entire  freedom  of  internal  intercourse  similar  to  that  which 
had  so  long  existed  in  our  American  Union.  Fiercely  opposed 
in  this  by  British  agents,  public  and  private,  no  less  than  seven- 
teen years  were  required  for  its  accomplishment;  but  the  year 
1835  at  length  witnessed  the  formation  of  that  complete  Customs 
Union  which  still  exists,  and  to  which  the  world  at  large  stands  in- 
debted for  the  creation  of  a  great  empire  which  now  stands  first  in 
Europe  for  the  development,  moral  and  material,  ©f  its  people,  and 
for  the  influence  it  exercises  over  the  movements  of  the  Eastern 
Continent. 

Stein  gave  to  the  Prussian  people  that  freedom  which  has  every- 
where been  seen  to  result  from  division  of  the  land,  but  to  make  it 
permanent,  to  extend  it  throughout  German}r,  and  to  prevent  the 
retrograde  movement  which  must  inevitably  have  resulted  from  per- 
sistence in  a  policy  which  separated  producers  from  consumers,  and 
which  looked  to  constant  exportation  of  the  soil  in  the  form  of  rude 
products,  it  was  needed  that  another  great  man,  List,  should  make 
his  appearance  on  the  stage.  At  the  cost  of  both  property  and  life 
he  did  the  work,  and  if  we  now  seek  kis  monument,  we  shall  find  it 
in  the  remarkable  empire  that  has  so  recently  appeared  upon  the 
European  stage,  described  in  my  former  letter. 

Following  the  example  set  by  Prussia,  Russia,  by  dividing  her 
land  among  those  who  previously  had  owned  or  cultivated  it,  has 
made  one  great  step  towards  the  establishment  of  freedom  for  her 
whole  people.  Thus  far,  however,  the  Emperor  seems  to  have 
failed  to  see  that  there  can  be  no  real  freedom  for  men  who  are 
compelled  to  waste  their  labor  and  to  exhaust  their  soil  by  sending 
its  products  in  their  rudest  forms  to  foreign  markets.  The  day 
must,  however,  come  when  his  eyes  will  be  open  to  that  great  fact, 
and  then,  but  not  till  then,  will  it  be  that  the  benevolent  desires 
of  those  who  had  labored  in  the  cause  of  Russian  emancipation  will 
stand  a  chance  of  being  fully  realized. 

2.  Failing  altogether  to  profit  by  the  great  examples  that  had 
thus  been  set  us,  we  have  proclaimed  emancipation  while  leaving  all 
the  1  ,nd  in  possession  of  its  opponents ;  and  have  given  the  right  of 


suffrage  to  men  who,  as  the  recent  election  has  proved  to  be  the 
case,  must  exercise  it  in  a  way  to  please  their  late  masters,  or  forfeit 
power  to  obtain  bread  for  their  wives  and  children.  So  far  as  regards 
public  lands,  the  Homestead  Law  happily  places  all  on  an  equal 
footing,  but  outside  of  this  the  union  man,  white  or  black,  seems 
likely  to  enjoy  no  rights  whatsoever. 

As  a  slave  the  black  man  had  a  large  money  value,  and  it  was 
greatl}r  to  the  interest  of  planters  to  provide  carefully  for  the  women 
and  the  children,  much  of  the  year's  profit  arising  from  increase  of 
stock.  Now,  having  lost  all  such  value,  and  having  ceased  to  be 
mere  chattels,  the  men  are  shot  down  by  hundreds,  while  women 
and  children  perish  for  want  of  medical  assistance.  How  small  is 
the  chance  in  this  respect  for  black  republicans  may  be  seen  from  the 
following  description  of  affairs  as  they  exist  in  relation  to  whites  in 
Edgecombe  county,  North  Carolina,  at  the  present  moment  :— 

"  Cases  are  frequently  reported  to  me  of  physicians  refusing  to  attend  the  sick, 
because  their  relatives  were  republicans,  or  expressed  their  intention  to  vote  for 
Grant  and  Colfax.  One  man  came  into  my  office  and  told  me  that  his  little  boy 
died  on  Monday  for  want  of  medical  aid.  No  physician  in  the  part  of  the 
country  where  he  lived  would  attend  the  boy,  because  he  was  a  radical ;  one 
storekeeper  kept  him  from  eight  o'clock  in  the  morning  until  two  o'clock  in  the 
afternoon,  and  would  not  sell  him  anything,  because  he  persistently  said  he 
would  vote  for  Grant.  One  man  asked  me  to  send  for  a  northern  physician, 
because  the  faculty  of  this  country  would  not  attend  his  wife,  and  she  was  at 
the  point  of  death.  Did  I  tell  you  about  the  affair  in  Wilson  county  a  few 
weeks  ago?  The  authorities,  all  Rebels,  and  equal  to  Ku-Klux,  arrested  a 
colored  man  named  Grimes,  on  the  charge  of  burning  a  barn,  but  Grimes  proved 
himself  to  any  reasonable  and  unprejudiced  mind  perfectly  innocent.  But  he  is 
the  leader  of  the  Union  League,  and  they  wanted  to  rake  him  up,  as  he  had 
made  a  severe  speech  against  them  and  in  favor  of  the  radicals  the  day  before. 
A  delegation  of  colored  men  came  for  me  twenty  miles.  I  went.  I  asked  for  a 
hearing  for  Grimes  in  my  presence.  It  was  not  granted.  I  offered  to  bail  him. 
This  offer  was  rejected.  A  Rebel  drew  his  revolver  on  me  in  the  court-house 
behind  my  back.  Some  one  more  prudent  stopped  his  shooting.  I  left  telling 
them  I  would  have  Grimes  out,  and  the  next  morning  they  released  him  to  pre- 
vent my  having  the  gratification  of  doing  it,  so  I  was  told.  Grimes  wouldn't 
promise  them  to  vote  for  Seymour  and  Blair,  but  the  next  day  he  raised  a  com- 
pany and  went  to  the  Raleigh  Convention." 

Nominally  free,  the  condition  of  the  blacks,  in  such  a  state  of 
affairs,  must  be  far  worse  than  it  had  ever  been  before. 

3.  Nominally  free,  but  realty  enslaved,  the  Irish  people,  long  be- 
fore the  year  (1846)  of  the  great  famine,  were  described  by  Thack- 
eray as  "starving  by  millions;"  and  by  another  high  authority  as 
having  before  them  only  the  choice  between  "  land  at  any  rent  on 
one  hand,  or  starvation  on  the  other."  Famine  and  emigration 
having  since  largely  reduced  their  number,  and  measures  of  confisca- 
tion having  transferred  a  large  portion  of  the  soil  from  Irish  to 
British  hands,  they  now  tell  us  of  an  increased  prosperity  of  the 
Irish  people ;  but  on  studying  the  real  facts  of  the  case  we  learn,  that 
"  at  no  period  has  their  hold  upon  the  land  been  so  feeble  and  pre- 
carious as  now;"  that  "the  control  of  landlords  over  their  tenants 
is  practically  absolute;"  that  "they  can  and  do  make  by-laws  on 
their  estates  which  place  the  tenant  for  all  practical  purposes  in  a 
state  of  serfdom;"  that  "by  those  rules  marriage  has  been  known  to 
be  forbidden  without  license  of  the  agent ;"  that  "  tenancy  from  year 


10 

to  year  is  redu-cod  by  the  contrivance  of  an  annual  notice  to  quit  to 
actual  tenancy  at  will;"  and  that  "in  some  estates  a  receipt  for 
rents  is  never  given  without  a  printed  notice  to  quit  on  the  back  of 
it."* 

The  negro  slave  of  our  Southern  States,  more  fortunate  than  the 
Irish  one,  had  an  actual  money  value,  and  of  so  great  amount  as  to 
make  it  highly  profitable  for  his  owner  to  feed,  clothe,  and  house  him, 
to  provide  medical  attendance,  to  care  for  his  children,  and  gene- 
rally to  do  nearly  as  well  for  him  as  he  would  for  for  his  horses  or  his 
cattle.  So  absolutely  valueless,  on  the  ctntrary,  has  been  the  Irish 
slave  that  population  has  been  declared  to  be  "a  nuisance,"  to  be 
abated  by  means  of  any  and  every  measure  of  oppression  that  could 
be  devised ;  and  when  starvation  had  been  followed  by  pestilence, 
this  latter  has  been  hailed  as  having,  in  the  providence  of  God,  been 
sent  as  a  means  of  relieving  the  land  from  the  burden  of  supporting 
so  many  useless  mouths. 

4.  Such  being  Irish  freedom,  we  may  now  advantageously  study 
the  condition  of  the  agricultural  population  of  England  with  a  view 
to  see  what  there  has  been  and  now  is  the  effect  of  a  monopoly  of 
the  land  such  as  we  have  permitted  to  remain  in  our  Southern 
States.  Doing  this,  we  find  that  whereas  but  recently  we  were  told 
that  it  was  to  the  south  of  England  we  were  to  look  for  the  greatest 
agricultural  degradation,  when  we  turn  our  eyes  to  the  Eastern 
counties  we  meet  with  the  state  of  things  here  described : — 

"  'The  gang  system,'  as  recently  exhibited  in  Parliament,  in  brief  is  this  :  In 
the  Fen  districts,  covering  nearly  a  million  of  acres  of  the  richest  land  in  Eng- 
land, Huntingdonshire,  Cambridgeshire,  Nottinghamshire,  Norfolk,  Suffolk,  and 
in  parts  of  the  counties  of  Northampton,  Bedford,  and  Rutland,  about  seven 
thousand  children,  from  five  years  of  age  and  upwards,  besides  persons  of  both 
sexes  of  from  fifteen  to  eighteen  years  of  age — are  employed  in  gangs  numbering 
from  fifteen  to  twenty  laborers  in  each  gang,  under  a  master,  and  in  a  condition  dif- 
fering from  slavery  only  because  it  is  infinitely  worse. 

"  The  gang  master  is  almost  invariably  a  dissolute  man,  who  cannot  get 
steady  employment  as  a  laborer  with  any  decent  farmer.  In  most  instances  he 
actually  purchases  the  labor  of  the  children  from  poor  parents  ;  he  sells  this 
labor  to  farmers,  pays  the  gang  what  he  pleases,  and  puts  the  profit  in  his 
pocket.  For  seven  or  eight  months  in  the  year  these  gangs  are  driven,  often 
seven  or  eight  miles  a  day,  to  farms  where  they  work  at  planting,  weeding, 
picking,  stone-gathering,  and  like  labor,  from  half-past  five  in  the  morning  to 
seven  or  eight  o'clock  in  the  evening.  The  gang-master  is  paid  by  the  day  or 
by  the  acre  ;  and  he  pays  the  little  children  from  fourpence  to  sixpence  per  day, 
while  the  older  lads  and  girls  receive  from  nine  to  fifteen  pence.  The  master, 
for  driving  his  hands  to  the  field  and  for  keeping  them  up  to  their  work,  which 
Le  does  with  a  stick,  makes  an  estimated  profit  of  a  pound  sterling,  or  there- 
abouts, a  week. 

"There  is  testimony  to  show  that  hundreds  of  the  younger  children  are  car- 
ried home  in  the  arms  of  the  older  lads  every  night.  From  working  breast- 
high  in  wet  grain  many  of  the  children  are  crippled  for  life  by  rheumatism, 
while  others  contract  the  seeds  of  ague,  pleurisy,  and  consumption.  Cases  are 
given  where  little  girls,  four  years  old,  have  been  driven  through  these  long, 
terrible  days  of  work.  The  most  pathetic  pictures  presented  by  J/r.  Wilberforce 
of  colonial  slave-driving  forty  years  ago,  make  ihe  British  V/est  Indies  seem  almost 
an  Arcadia  in  comparison  with  the  Fen  districts  in  England  to-day. 

"This  exhibition,  shocking  as  it  is,  is  by  no  means  the  most  frightful  phase 
of  the  gang  system.  The  gairgs  are  under  no  moral  restraint  whatever.  Often- 


*  Morison.     Irish  Grievances  shortly  stated,  pp.  33,  35.     London,  1SG8. 


11 

times  at  night  both  sexes  are  huddled  together  in  barns,  where,  among  the  older 
boys  and  girls,  the  most  shameful  events  naturally  follow.  Clergymen  and  other 
respectable  witnesses  testified  to  the  Commission  of  Inquiry  that  the  gang 
laborers  are  '  beneath  morals.'  They  have  no  consciousness  of  chastity,  and  do 
not  know  the  meaning  of  the  word.  Medical  directors  of  infirmaries  state  that 
pan*  girls,  as  young  as  thirteen  years,  have  been  brought  to  them  to  be  con- 
i fined.  Their  language  and  conduct  are  so  depraved  that  dozens  of  parish 
clergymen,  surgeons,  and  respectable  laboring  people,  declared  to  the  commission 
that  the  introduction  of  any  gang  labor  in  any  village  extinguishes  morality." 
— Evening  Post. 

Turning  now  to  the  west  of  England  we  find  a  state  of  things 
entirely  in  harmony  with  this,  as  may  be  seen  by  all  of  those  who 
care  to  study  the  memoir  of  Canon  Girdlestone,  read  before  the 
British  Association  in  August  last. 

The  Edinburgh  Review,  just  now  published,  questions  the  accuracy 
of  some  of  the  Canon's  details,  but  admits  that  British  agricultural 
laborers  have  before  them  no  future  but  that  of  the  slavery  of  the 
poor  house — a  slavery  worse  than  that  of  our  southern  negroes  in 
the  past. 

5.  So  long  as  the  great  Scottish  proprietors  could   sell  to  the 
government  the  blood  and  bones  of  their  subjects,  creating  regi- 
ments to  be  officered  by  sons  and  nephews,  brothers  and  cousins  of 
their  own,  everything  was  done  to  encourage  increase  of  Highland 
population.     That  branch  of  the  slave  trade  having,  however,  ceased 
to  exist,  and  the  slave  having  no  longer  a  money  value,  people 
whose  forefathers  had  for  centuries  occupied  millions  of  acres  have, 
by  thousands  and  tens  of  thousands,  been  expelled  from  their  little 
holdings,  under  circumstances  of  atrocity  wholly  without  a  parallel. 
The  latest  exhibit  of  these  well-known  atrocities,  is  given  in  the 
last  (October)  No.  of  the  Westminster  Review.     The  most  prominent 
actors  therein  are  found  in  the  liberal  families  of  Stafford  and  of 
Sutherland.     Their  most   distinguished  advocate  is  found  in  the 
liberal  Duke  of  Argyle,  so  well  known  as  author  of  the  Reign  of 
Law,  which  has  passed  through  so  many  and  so  large  editions. 

6.  The  British  and  Irish  people  above  referred  to  are  really  en- 
slaved, although  the  law   refuses  to  permit  their   being  sold  as 
chattels,  and  although  the  world  is  accustomed  to  speak  of  them  as 
free.     In  what  then  does  real  freedom  consist  ?     Let  us  see ! 

Friday,  on  Crusoe's  island,  found  no  competition  for  the  purchase 
of  his  services,  and  was,  therefore,  glad  to  sell  himself  on  terms 
dictated  by  the  man  who  could,  if  he  would,  both  clothe  and  feed 
him,  thus  becoming  the  latter's  slave.  Had  the  island  contained 
other  Crusoes,  their  competition  would  have  enabled  him  to  make 
his  selection  among  them  all,  exercising  thus  that  power  of  self- 
government  by  which  the  freeman  is  distinguished  from  the  wretched 
slaves  above  described. 

Will  you  buy?  Will  3-011  sell?  The  man  who  has  a  commo- 
dity, and  must  sell,  is  forced  to  ask  the  first  of  these  questions; 
obtaining,  for  that  reason,  twenty  or  thirty  per  cent,  less  than  what 
might  be  regarded  as  the  fair  market  price.  His  neighbor,  not 
forced  to  sell,  waits  for  the  second,  thereby  obtaining  more,  per- 
haps, than  the  ordinary  price.  Such  being  the  case  with  commodi- 


12 

ties  that  can  be  kept  on  hand  waiting  for  a  purchaser,  to  how  much 
greater  extent  must  it  not  be  so  in  reference  to  that  labor  power 
which  results  from  the  consumption  of  food,  and  which  cannot  be 
held  over  for  even  a  single  instant.  The  trader  takes  the  market- 
price  for  his  oranges,  great  as  may  be  his  loss ;  he  stores  his  iron, 
waiting  for  a  better  market.  The  farmer  sells  his  peaches  on  the 
instant,  low  as  may  be  the  price ;  but  he  holds  his  wheat  and  pota- 
toes, waiting  for  an  advance.  The  laborer's  commodity  being  yet 
more  perishable  than  oranges  or  peaches,  the  necessity  for  its  instant 
sale  is  still  more  urgent. 

The  farmer  and  the  merchant  having  stored  their  sugar,  or  their 
wheat,  can  obtain  advances,  to  be  returned  when  their  commodities 
are  sold.  The  laborer  can  obtain  no  advance  upon  his  present  hour, 
his  commodity  perishing  on  the  instant  of  production.  It  must  be 
at  once  either  sold  or  wasted. 

Further,  the  merchant  may  continue  to  eat,  drink,  and  wear 
clothing,  his  stock  meanwhile  perishing  on  his  hands.  The  farmer 
may  eat  his  potatoes,  after  failing  to  sell  his  peaches.  The  laborer 
must  sell  his  potential  energies,  be  they  what  they  may,  or  perish 
for  want  of  food.  In  regard  to  no  commodity,  therefore,  is  the  effect 
resulting  from  the  presence  or  absence  of  competition  so  great,  as  in 
relation  to  human  force.  Two  men  competing  for  its  purchase,  its 
owner  becomes  a  freeman.  Two  others,  competing  for  its  sale, 
become  enslaved.  The  whole  question  of  freedom  or  slavery  for 
man  is,  therefore,  embraced  in  that  of  competition." 

The  more  varied  the  employments,  the  greater  is  the  tendency 
towards  having  the  miner,  the  weaver,  the  spinner,  the  mason, 
and  the  carpenter,  take  their  places  by  the  side  of  the  farmer; 
the  greater  becomes  the  competition  for  purchase  of  labor;  the 
more  does  the  land  tend  to  become  divided ;  the  greater  is  the 
money  value  of  labor  and  land ;  the  more  perfect  is  the  farmer's  in- 
dependence; the  higher  is  the  state  of  manners  and  morals;  and  the 
more  perfect  becomes  the  freedom  of  the  whole  people  of  whatsoever 
sex  or  age.  In  no  part  of  the  world  is  there  at  this  moment  so 
much  competition  as  in  New  England  for  the  purchase  of  labor, 
and  in  none,  consequently,  are  its  people  so  absolutely  free.  In 
none  claiming  in  any  manner  to  rank  as  civilized,  has  the  contrary 
tendency  so  much  existed  as  in  Ireland.  In  none,  therefore,  has 
there  been  so  universal  a  competition  for  the  sale  of  labor ;  the 
consequences  exhibiting  themselves  in  the  fact,  that  the  occupant  of 
land  is  now  more  than  ever  before  a  mere  slave,  holding  his  existence 
at  the  pleasure  of  the  man  who  claims  to  own  the  land. 

7.  Thus  far  our  measures  of  emancipation  have  resulted  in  giving 
to  the  negro  slave  just  the  same  amount  of  freedom  that  has  so  long 
been  enjoyed  by  the  Irish  slave,  to  wit,  that  he  may,  if  he  will,  marry 
and  beget  children  ;  that  those  children  may  not  forcibly  be  taken 
from  him ;  and  that,  although  he  may  with  impunity  be  shot  or 
otherwise  maltreated,  he  cannot  be  exchanged  by  his  master  against 
any  given  quantity  of  money.  Wholly  dependent  for  employment 
upon  the  men  who  own  the  land  his  situation  is  almost  precisely 
that  of  the  great  mass  of  the  Irish  people,  as  here  described  by 
one  of  the  most  distinguished  of  English  authors ;— 


13 

"  In  a  country  in  which  every  one  who  can  find  a  landlord  to  accept  him  can 
be  a  farmer,  and  scarcely  any  one  can  be  a  laborer ;  where  the  three  only  alterna- 
tives are  the  occupation  of  land,  beggary,  or  famine  ;  where  there  is  nothing  to 
repress  competition  and  everything  to  inflame  it — the  treaty  between  landlord 
and  tenant  is  not  a  calm  bargain,  in  which  the  tenant,  having  offered  what  he 
thinks  the  land  worth  to  him,  cares  little  whether  his  offer  be  accepted  ;  it  is  a 
struggle  like  the  struggle  to  buy  bread  in  a  besieged  town,  or  to  buy  water  in 
an  African  caravan.  It  is  a  struggle  in  which  the  landlord  is  tempted  by  an 
extravagant  rent ;  the  agent,  by  fees  or  by  bribes  ;  the  person  in  possession,  by 
a  premium  to  take  him  to  another  country ;  and  rivals  are  scared  away  by  threats 
or  punished  by  torture,  mutilation,  or  murder.  The  successful  competitor  knows 
that  he  has  engaged  to  pay  a  rent  which  will  swallow  the  surplus,  beyond  the 
poorest  maintenance  for  his  family,  that  with  his  trifling  stock  he  can  force  the 
land  to  produce.  He  knows  that  if  he  fails  to  pay  he  must  expect  ejectment, 
and  that  ejectment  is  beggary." — Senior.  Journals,  Conversations,  and  Essays 
relating  to  Ireland,  London,  1868. 

To  four  millions  of  people  similarly  situated  we  have  given  the 
right  to  vote  in  accordance  with  the  orders  of  their  masters,  at  the 
same  time  giving  to  those  masters  the  right  of  representation  in 
Congress  for  each  and  every  one  of  them,  thereby  making  a  most 
important  addition  to  the  power  that  to  the  present  time  has  been 
so  much  misused. 

What  is  the  use  now  to  be  made  of  the  tremendous  power  thus 
accumulated  in  their  hands  is  shown  by  the  recent  proceedings  in 
Georgia  and  Louisiana.  A  year  hence  it  will  be  the  same  elsewhere, 
and  the  day  is  not  far  distant  when,  if  the  national  authorities  do 
not  interfere,  the  whole  body  of  the  States  south  of  Mason  and 
Dixon's  line,  with  the  possible  exception  of  Tennessee,  will  be  found 
engaged  in  a  new,  but  peaceful,  rebellion  that  must  this  time  prove 
entirely  successful,  controlling  Congress  and  placing  in  the  presi- 
dential chair  some  man  whose  claim  to  that  high  office  results  from 
participation  in  the  accursed  rebellion  so  lately  crushed. 

Clearly  seeing  that  such  is  likely  to  be  the  case,  loyal  Southern 
men  are  crying  aloud  for  immigration,  the  rebel  portion  of  the 
population  meantime  everywhere  notifying  Northern  men  that  if 
they  would  save  their  lives  they  must  flee  the  land,  and  thus  pre- 
paring for  a  new  rebellion  in  which  they  will  be  most  heartily  sup- 
ported by  all  the  rebel  sympathizers  of  Northern  States.  Just  now 
I  have  heard  of  the  final  expulsion,  even  from  Eastern  Tennessee, 
of  a  body  of  Scotchmen  who  had  been  sent  there  with  a  view  to 
the  introduction  of  the  culture  of  long-wooled  sheep. 

8.  The  remedy  for  all  this  is  to  be  found  in  creating  competition 
with  the  landholders  for  purchase  of  negro  labor,  and  thus  giving 
to  the  slave  that  freedom  which  results  from  power  to  choose  be- 
tween employers  in  the  field,  in  the  mines,  and  in  the  workshop. 

Why  is  it,  however,  that  such  competition  had  not  long  since 
existed  ?  For  the  reason  that  our  legislators  have  wholly  failed  to 
£ee  that  throughout  the  world  freedom  had  come,  not  as  the  result 
of  mere  proclamations,  but  as  a  consequence  of  that  diversification" 
in  the  demand  for  human  service  which  enables  each  and  every  in- 
dividual to  find  the  employment  for  which  he  had  been  intended, 
for  which  he  was  most  completely  fitted.  Look  where  they  mignT 
.they  would  have  seen  that  slavery  existed  as  a  consequence  of  ex- 
clusive dependence  on  labors  of  the  field.  Correction  of  this,  bring- 


14 

ing  with  it  freedom  for  all  would  have  resulted  from  permanent 
maintenance  of  the  protective  tariff  of  1842,  as  under  it  both  the 
centre  and  the  south  would  have  been  filled  with  furnaces  and  fac- 
tories, thereby  trebling  the  money  value  of  land  while  greatly  ele- 
vating the  man  who  worked  it.  Great  properties  would  gradually 
have  become  divided;  the  little  proprietor — the  man  "whose 
touch,"  says  Arthur  Young,  ''turns  sand  into  gold" — would  long 
before  this  have  made  his  appearance  on  the  stage ;  the  harmony 
of  all  real  and  permanent  interests  would  have  been  hourly  becom- 
ing more  fully  recognized ;  immigration  would  have  attained  pro- 
portions much  greater  than  any  it  yet  has  seen ;  and  the  wealth  and 
power  of  the  Union  would  be  thrice  greater  than  now  they  are. 

So  rapid  under  the  tariff  of  1842  was  the  growth  of  Southern 
manufactures  that  in  1848  the  editor  of  the  Charleston  Mercury, 
Mr.  Barnwell  Rhett,  was  led  to  predict  that  before  the  lapse  of 
another  decade  the  South  would  have  ceased  to  export  raw  cotton. 
Unfortunately,  however,  for  his  prediction  the  South  had  just  before 
placed  the  knife  to  its  own  throat  by  giving  us  the  revenue  tariff 
of  1846  in  place  of  the  protective  one  of  1842.  From  that  hour 
Southern  manufactures  declined,  with  corresponding  increase  in  the 
growth  of  that  barbarous  feeling  which  found  its  culmination  in  the 
atrocities  of  the  late  rebellion. 

For  the  suppression  of  that  rebellion  we  needed  a  million  of  men 
in  arms.  For  prevention  of  the  one  that  is  now  proposed,  we  need, 
and  that  at  once,  great  armies  of  men  and  women  carrying  with 
them  spades  and  ploughs,  spindles  and  looms,  sewing-machines  and 
steam-engines,  geographies  and  Testaments,  and  all  other  of  the 
machinery  by  aid  of  which  the  people  of  the  North  have  been  be- 
coming more  prosperous  and  more  free.  For  enabling  such  armies 
to  move,  and  for  giving  them  security  while  employed  in  carrying 
into  full  effect  the  great  work  of  emancipation,  we  need  that  the 
government  should,  at  the  earliest  moment,  take  measures  for  cre- 
ating, and  for  placing  in  loyal  hands,  great  lines  of  road  by  means 
of  which  the  North  and  the  South,  the  Northeast  and  the  South- 
west, the  Northwest  and  the  Southeast,  should  have  between  them 
communications  as  safe  and  rapid  as  those  already  existing  between 
the  shores  of  the  Atlantic  and  the  waters  of  the  Mississippi. 

To  do  this  thoroughly  and  thus  to  bring  the  people  now  occupy- 
ing the  borders  of  the  Hudson,  the  Delaware,  and  the  Ohio,  into 
direct  and  rapid  communication  with  those  of  the  Savannah  and  the 
Rio  Grande,  would  involve  an  annual  cost,  as  interest  on  the  amount 
expended,  less  than  would  be  required  for  maintenance  of  half  a 
dozen  regiments  of  men  in  arms ;  and  yet,  while  preventing  all 
future  necessity  for  raising  such  regiments,  it  would  so  add  to  the 
productive  power  of  the  nation  that  the  growth  of  wealth  would 
soon  be  seen  to  be  twice  greater  than  at  any  former  period. 

With  that  growth  would  come  division  of  the  land,  always  a  con- 
sequence of  improvement  in  the  means  of  communication  and  ex- 
change. Freedmen,  now  wholly  dependent  upon  planters  for  food 
and  clothing,  would  find  in  road  makers  and  furnace  men  competi- 
tors with  their  recent  masters  for  purchase  of  their  services,  and 
would  soon  be  seen  accumulating  little  capitals  by  aid  of  which 


15 

the}"  might  be  enabled  to  enter  upon  and  improve  the  little  tracts 
secured  to  them  by  the  Homestead  Laws,  and  through  many  of 
which  these  roads*  would  run.  The  already  rich  would  be  made 
richer  by  means  of  the  increased  value  given  to  their  properties,  the 
now  down-trodden  negro  race  meanwhile  becoming  from  hour  to 
hour  more  free  and  independent.  Harmony  and  peace  would  take 
the  place  of  existing  discord,  and  the  various  parts  of  the  Union 
would  become  as  thoroughly  united  as  already  are  those  of  the  great 
German  Empire  so  recently  created. 

Let  it  now  be  understood  that  men  and  women  who  give  them- 
selves to  the  work  of  Southern  development  both  can  and  will 
be  sustained  by  all  the  powers  of  the  government,  and  the  negro 
will  become  really  free,  while  the  nation  will  become  as  really  inde- 
pendent. Let  this  not  be  done,  and  the  negro  will  be  re-enslaved  ; 
the  Union  will  be  split  up  into  fragments,  as  so  recently  has  been 
the  case  with  the  great  empire  which  now  stands  in  the  lead  of 
Europe ;  and  the  men  who  have  so  nobly  carried  us  through  the 
late  rebellion  will  have  to  regret  that  their  labors  have  resulted  in 
leaving  the  country  in  a  condition  far  worse  than  that  which  had 
existed  when  Fort  Sumter  had  been  first  assailed. 

Earnestly  hoping  that  a  result  very  different  from  this  may  yet  be 
reached,  I  remain,  Yours,  very  respectfully  and  truly, 

GEN.  U.  S.  GRANT.  HENRY  C.  CAREY. 

PHILADELPHIA,  November  9th,  1S68. 


LETTER  THIRD. 

DEAR  SIR: — 

AN  eminent  foreigner,  speaking  of  our  countrymen,  characterized 
them  as  "  the  people  who  soonest  forget  yesterday,"  and  that  nothing 
could  be  more  accurate  is  shown  by  the  facts  which  I  propose  now 
to  give,  as  follows : — 

The  revenue  tariff  period  which  followed  the  close,  in  1815,  of  the 
great  European  war,  was  one  of  great  distress  both  private  and 
public.  Severe  financial  crises  bankrupted  banks,  merchants,  and 
manufacturers;  greatly  contracted  the  market  for  labor  and  all  its 
products  ;  so  far  diminished  the  money  value  of  property  as  to 
xslace  the  aebtor  eve^where  in  the  power  of  his  creditor ;  caused 
the  transfer  of  a  very  large  portion  of  it  under  the  sheriffs  hammer ; 
and  so  far  impaired  the  power  of  the  people  to  contribute  to  the 
revenue  that,  trivial  as  were  the  public  expenditures  of  that  period, 
loans  were  required  for  enabling  the  Treasury  to  meet  the  de- 
mands upon  it.  Under  the  protective  tariff  of  1828  all  was  changed, 
and  with  a  rapidity  so  great  that  but  few  years  cf  its  action  were 
required  for  bringing  the  country  up  to  a  state  «..  prosperity  the 
like  of  which  had  never  before  been  known,  here  or  elsewhere;  for 
annihilating  the  public  debt ;  and  for  causing  our  people  wholly 


16 

to  forget  the  state  of  almost  ruin  from  which  they  so  recently  had 
been  redeemed. 

Returning  once  again,  as  a  consequence  of  this  forgetfulness,  to 
the  revenue  tariff  system,  the  troubles  and  distresses  of  the  previous 
period  were  reproduced,  the  whole  eight  years  of  its  existence  pre- 
senting a  series  of  contractions  and  expansions,  ending  in  a  state 
of  weakness  so  extreme  that  bankruptcy  was  almost  universal ;  that 
labor  was  everywhere  seeking  in  vain  for  employment ;  that  the 
public  credit  was  so  entirely  destroyed  that  the  closing  year  of 
that  unfortunate  period  exhibited  the  disgraceful  fact  of  Commis- 
sioners, appointed  by  the  Treasury,  wandering  throughout  Europe 
and  knocking  at  the  door  of  all  its  principal  banking  houses  with- 
out obtaining  the  loan  of  even  a  single  dollar.  Public  and  private 
distress  now  compelling  a  return  to  the  protective  system  we  find 
almost  at  once  a  reproduction  of  the  prosperous  days  of  the  period 
from  1829  to  1835,  public  and  private  credit  having  been  restored, 
and  the  demand  for  labor  and  its  products  having  become  greater 
than  at  Any  former  period. 

Once  again,  however,  do  we  find  our  people  forgetting  that  to  the 
protective  system  had  been  due  the  marvellous  changes  that  were 
then  being  witnessed,  and  again  returning  to  that  revenue  tariff  sys- 
tem, to  which  they  had  been  indebted  for  the  scenes  of  ruin  which 
had  .marked  the  periods  from  1817  to  1828,  and  from  1835  to  1842. 
California  gold  now,  however,  came  in  aid  of  free  trade  theories, 
and  for  a  brief  period  our  people  really  believed  that  protection  was 
a  dead  issue  and  could  never  be  again  revived.  With  1854,  how- 
ever, that  delusion  passed  away,  the  years  that  followed,  like  those 
of  the  previous  revenue  tariff  periods,  having  been  marked  by 
enormous  expansions  and  contractions,  financial  crises,  private  ruin, 
and  such  destruction  of  the  national  credit  that  with  the  close  of 
Mr.  Buchanan's  administration  we  find  the  treasury  unable  to  ob- 
tain the  trivial  amount  which  was  then  required,  except  on  pay- 
ment of  most  enormous  rates  of  interest. 

Once  again  do  we  find  the  ^untry  driven  to  protection,  and  the 
public  credit  by  its  means  so  well  established  as  to  enable  the 
treasury  with  little  difficulty  to  obtain  the  means  of  carrying  on 
a  war  whose  annual  cost  was  more  than  the  total  public  expendi- 
tures of  half  a  century,  including  the  war  with  Great  Britain  of 
1812.  Thrice  thus,  with  the  tariffs  of  1828,  1842,  and  1860,  has 
protection  redeemed  the  country  from  almost  ruin.  Thrice  thus, 
under  the  revenue  tariffs  of  1817,  1835,  and  1846,  has  it  been  sunk 
so  low  that  none  could  be  found  "  so  poor  as  do  it  reverence." 
Such  having  been  our  experience  through  half  a  century  it  might 
have  been  supposed  that  the  question  would  be  regarded  now  as 
settled,  yet  do  we  find  among  us  men  in  office  and  out  of  office, 
secretaries  and  senators,  owners  of  ships  and  railroads,  farmers  and 
laborers,  denouncing  the  system  under  which  at  every  period  of  its 
existence,  and  most  especially  in  that  of  the  recent  war,  they  had 
so  largely  prospered — thereby  proving  how  accurate  has  been  the 
description  of  them  above  referred  to,  as  "  the  people  who  soonest 
forget  yesterday." 

Such  being  the  case,  it  seems  to  me  that  it  might  be  veil  to  show 


17 

what  was  the  actual  state  of  affairs  throughout  the  country  in  the 
revenue  tariff  }rears  immediately  preceding  the  war,  and  thereby 
enable  railroad  owners  to  study  what  had  been  the  effect  upon  their 
interests  that  had  resulted  from  the  cry  of  cheap  iron ;  ship  owners 
to  see  that  the  decay  of  their  interests  had  been  the  necessary  result 
of  a  system  under  which  internal  commerce  had  been  destroyed ; 
laborers  to  see  why  it  had  been  that  labor  had  then  been  so  super- 
abundant and  so  badly  paid;  farmers  to  see  why  it  had  been  that 
their  farms  had  then  been  so  deeply  mortgaged ;  secretaries  to  see 
why  it  had  been  that  the  public  credit  had  then  been  so  nearly 
annihilated ;  and  all  to  see  why  it  had  been  that  the  pro-slavery 
power  had  so  largely  grown  as  to  have  warranted  the  south  in  ven- 
turing on  the  late  rebellion.  To  that  end,  I  shall  now  present  two 
letters  written  in  1858,  and  addressed  to  our  then  president,  Mr. 
Buchanan,  respectfully  asking  you  to  remark  the  predictions  that 
further  continuance  in  the  same  direction  must  result  in  financial 
and  political  ruin,  and  in  our  being  driven  from  the  ocean,  all  of 
which  we  now  see  to  have  been  so  fully  realized.* 

"Civilized  communities — those  communities,  Mr.  President, 
which  have  obtained  that  freedom  of  domestic  intercourse  which, 
as  yot  have  seen,  we  so  sorely  need — follow  the  advice  of  Adam 
Smith,  in  exporting  their  wool,  and  their  corn,  in  the  form  of  cloth, 
at  little  cost  for  transportation.  Thus,  France,  in  1856,  exported 
silks  and  cloths,  clothing,  paper,  and  articles  of  furniture,  to  the 
extent  of  $300,000,000  ;  and  yet  the  total  weight  was  short  of  FIFTY 
THOUSAND  TONS — requiring  for  its  transport  but  forty  ships  of  mode- 
rate size,  and  the  services  of  perhaps  2000  persons. 

"  Barbarous,  and  semi-barbarous  countries,  on  the  contrary,  ex- 
port their  commodities  in  their  rudest  state,  at  heavy  cost  for  trans- 
portation. India  sends  the  constituents  of  cloth — cotton,  rice,  and 
indigo — to  exchange,  in  distant  markets,  for  the  cloth  itself.  Brazil 
sends  raw  sugar  across  the  ocean,  to  exchange  for  that  which  has 
been  refined.  We  send  wheat  and  Indian  corn,  pork  and  flour,  cot- 
ton and  rice,  fish,  lumber,  and  naval  stores,  to  be  exchanged  for 
knives  and  forks,  silks  and  cottons,  paper  and  China-ware.  The 
total  value  of  these  commodities  exported  in  1856 — high  as  were 
then  the  prices — was  only  $230.000,000  ;  and  yet,  the  American  and 
foreign  ships  engaged  in  the  work  of  transport  were  of  the  capacity 

Of  SIX  MILLIONS,  EIGHT  HUNDRED   AND  TWENTY-TWO  THOUSAND  TONS, 

— requiring  for  their  management  no  less  than  269,000  persons.f 

"  In  the  movement  of  all  this  property,  Mr.  President,  there  is 
great  expense  for  transportation.  Who  pays  it  ?  Ask  the  farmer  of 
Iowa,  and  he  will  tell  you,  that  he  sells  for  15  cents — and  that,  too, 
payable  in  the  most  worthless  kind  of  paper — a  bushel  of  corn  that, 
when  received  in  Manchester,  commands  a  dollar ;  and  that  he,  in 

*  These  letters  form  part  of  a  series  entitled  "  Letters  to  the  President  of  the 
United  States  on  the  Foreign  and  Domestic  Policy  of  the  Union  and  its  Effects  as 
exhibited  in  the  Condition  of  the  People  and  the  State."  Phila.,  1858. 

f  This  is  the  total  tonnage  that  arrived  from  foreign  countries,  in  that  year. 
A  small  portion  was  required  for  the  exportation  of  manufactured  commodi- 
ties, but  it  was  so  small  as  scarcely  to  require  notice. 


18 

this  manner,  gives  to  the  support  of  railroads  and  canals,  ships  and 
sailors,  brokers  and  traders,  no  less  than  eighty-Jive  per  cent,  of  the 
intrinsic  value  of  his  products.  Ask  him  once  again,  and  he  will 
tell  you  that  while  his  bushel  of  corn  will  command,  iy.  Manchester, 
18  or  20  yards  of  cotton  cloth,  he  is  obliged  to  content  himself  with 
little  more  than  a  single  yard — eighty-Jive  per  cent,  of  the  clothing 
power  of  his  corn  having  been  taken,  on  the  road,  as  his  contribution 
towards  the  tax  imposed  upon  the  country,  for  the  maintenance  of 
the  machinery  of  that  "  free  trade"  which,  as  you,  Mr.  President, 
have  so  clearly  seen,  is  the  sort  of  freedom  we  do  not,  at  present, 
need.* 

"  The  country  that  exports  the  commodity  of  smallest  bulk,  is 
almost  wholly  freed  from  the  exhausting  tax  of  transportation.  At 
Havre — ships  being  little  needed  for  the  outward  voyage,  while 
ships  abound — the  outward  freights  must  be  always  very  low. 

"  The  community  that  exports  the  commodities  of  greatest  bulk, 
must  pay  nearly  all  the  cost  of  transportation.  A  score  of  ships 
being  required  to  carry  from  our  ports  the  lumber,  wheat,  or  naval 
•stores,  the  tobacco,  or  the  cotton,  required  to  pay  for  a  single 
cargo  of  cloth,  the  outward  freights  must  always  be  at,  or  near, 
that  point  wh.ich  is  required  to  pay  for  the  double  voyage  ;  ai«l  every 
planter  knows,  to  his  cost,  how  much  the  price  of  his  cotton  is 
dependent  upon  the  rate  of  freight. 

"  In  the  first  of  these,  Mr.  President,  employments  become  from 
day  to  day  more  thoroughly  diversified  ;  the  various  human  facul- 
ties become  more  and  more  developed ;  the  power  of  combination 
tends  steadily  to  increase ;  agriculture  becomes  more  and  more  a 
science;  the  land  becomes  more  productive;  the  societary  move- 
ment becomes  more  stable  and  regular ;  and  the  power  to  purchase 
machinery  of  every  kind,  whether  ships,  mills,  or  the  precious  metals, 
tends  steadily  to  augment. 

"  In  the  last,  the  reverse  of  this  is  found,  the  pursuits  of  men 
becoming  less  diversified ;  the  demand  for  human  faculty  becoming 
more  and  more  limited  to  that  for  mere  brute  force,  or  for  the  craft 
by  which  the  savage  is  so  much  distinguished ;  the  power  of  asso- 
ciation tending  to  decline ;  agriculture  becoming  less  and  less  a 
science,  and  the  land  becoming  more  and  more  exhausted ;  the 
societary  movement  acquiring,  more  and  more,  the  fitfulness  and 
irregularity  of  movement  you  have  so  well  described  as  existing 
among  ourselves ;  and  the  power  to  obtain  machinery  of  any  kind 
tending  steadily  to  diminish. 

"  The  first  of  these,  Mr.  President,  may  be  found  in  the  countries 
of  Central  and  Northern  Europe — those  which  follow  in  the  lead  of 
Colbert  and  of  France.  All  of  these  are  gradually  emancipating 
themselves  from  the  most  oppressive  of  all  taxes,  the  tax  of  trans- 
portation. All  of  them,  therefore,  are  moving  in  the  direction  of 
growing  wealth  and  power,  with  correspondent  advance  in  civiliza- 
tion and  in  freedom. 

"  The  last  may  be  found  in  Ireland,  India,  Jamaica,  Portugal, 

*  "Thirty-one  independent  States  enjoying  a  thousand  advantages  and  carry 
ing  on  a  irratual  free  trade  with  each  other.  That  is  the  '  free  trade'  that  we 
really  want." — BUCHANAN. 


19 

Turkey,  and  these  United  States — the  countries  which  follow  in 
the  lead  of  England.  All  of  these,  are  becoming  more  and  more 
subjected  to  the  tax  of  transportation.  All  of  them,  therefore,  are 
declining  in  wealth  and  power,  in  civilization,  and  in  freedom. 

"  In  the  first,  the  land  yields  more  and  more  with  each  successive 

year with  constant  increase  in  the  power  of  a  bushel  of  wheat, 

or  a  pound  of  wool,  to  purchase  money.  In  the  last,  the  land 
yields  less  from  year  to  year,  with  constant  tendency  to  decline  in 
the  price  of  food  and  cotton.  The  first  import  the  precious  metals. 
The  last,  export  them.  The  first,  find  daily  increase  of  power  to 
maintain  a  specie  circulation,  as  the  basis  of  the  higher  and  better 
currency  supplied  by  banks.  The  last,  are  gradually  losing  the 
power  to  command  a  circulation  of  any  kind,  and  tending  more 
and  more  towards  that  barbaric  system  of  commerce  which  con- 
sists in  exchanging  labor  against  food,  or  wool  and  corn  against 
cloth. 

44  We  may  be  told,  however,  Mr.  President,  that  in  return  for 
the  eighty-five  per  cent,  of  his  products  that,  as  we  see,  is  paid  by 
the  farmer  of  Iowa,  and  by  the  Texan  planter,  we  are  obtaining  a 
magnificent  system  of  railroads — that  our  mercantile  marine  is 
rapidly  increasing — that,  by  its  means,  we  are  to  secure  the  com- 
mand of  the  commerce  of  the  world,  &c.  &c.  How  far  all  this  is 
so,  we  may  now  inquire.  To  me,  it  certainly  appears,  that  if  this 
be  really  the  road  to  wealth  and  power  it  would  be  well  to  require 
the  exportation  of  wheat  instead  of  flour,  paddy  in  place  of  rice, 
cotton  in  the  seed,  corn  in  the  ear,  and  lumber  in  the  shape  of  logs, 
rather  than  in  that  of  furniture. 

"  Looking,  first,  to  our  internal  commerce,  we  find  a  mass  of 
roads,  most  of  which  have  been  constructed  by  help  of  bonds  bear- 
ing interest  at  the  rate  of  6,  8,  or  10  per  cent. — bonds  that  have 
been  disposed  of,  in  the  market,  at  60,  70,  or  80  per  cent,  of  their 
nominal  value,  and  could  not  now,  probably,  be  re-sold  at  more 
than  half  the  price  at  which  they  orginally  had  been  bought.  Half 
made,  and  little  likely  ever  to  be  completed,  these  roads  are  worked 
at  great  expense,  while  requiring  constant  and  great  repairs.  As  a 
consequence  of  this  it  is,  that  the  original  proprietors  have  almost 
wholly  disappeared,  the  stock  being  of  little  worth.  The  total 
amount  applied  to  the  creation  of  railroads  having  been  about 
$1,000,000,000,  and  the  average  present  money  value  scarcely  exceed- 
ing 40,  if  even  30,  per  cent.,  it  follows  that  $600,000,000  have  been 
sunk,  and  with  them  all  power  to  make  new  roads.  Never,  at  any 
period  of  our  history,  have  we  been,  in  this  respect,  so  utterly  help- 
less as  at  present.  Nevertheless,  the  policy  of  the  central  government 
looks  steadily  to  the  dispersion  of  our  people,  to  the  occupation 
of  new  territories,  to  the  creation  of  new  States,  and  to  the  produc- 
tion of  a  necessity  for  further  roads.  That,  Mr.  President,  is  the 
road  to  physical  and  moral  decline,  and  political  death,  as  will  soon 
be  proved,  unless  we  change  our  course. 

"  The  railroad  interest  being  in  a  state  of  utter  ruin,  we  may  now 
turn  to  the  shipping:  one,  with  a  view  to  see  how  far  we  are  likely, 
by  its  aid,  to  obtain  that  command  of  the  commerce  of  the  world 
so  surely  promised  to  us  by  the  author  of  the  tariff  of  '46. 


Should  that  prove  to  be  moving  in  the  same  direction,  the  fact  will 
certainly  afford  new  and  stronger  proof  of  the  perfect  accuracy  of 
your  own  views,  Mr.  President,  as  to  the  sort  of  freedom  we  so 
much  require. 

uln  a  state  of  barbarism,  person  and  property  being  insecure, 
the  rate  of  insurance  is  high.  Passing  thence  towards  civilization, 
security  increases,  and  the  rate  of  insurance  declines,  as  we  see  it 
to  be  so  rapidly  doing,  in  reference  to  fire,  in  all  the  advancing 
countries  of  Europe.  Our  course,  in  reference  to  shipping,  being 
in  the  opposite  direction — security  diminishing,  when  it  should 
increase — the  rate  of  insurance  steadily  advances,  as  here  is 
shown : — 

Rates  of  Insurance  upon  American  Ships. 

1846.  1858. 

To  Cuba IJ  Per  cen^ 1|  to  2  per  cent. 

"Liverpool H        "        l|  to  2       " 

"  India  and  China    .         .         .         .  If        " 2^ 

To  and  from  Liverpool,  on  packet- 
ships,  annual  rates    .         .         .5          " 8 

"  To  what  causes,  Mr.  President,  are  we  to  attribute  this  extraor- 
dinary change  ?  May  it  not  be  found  in  the  fact,  that  the  more  we 
abandon  domestic  commerce,  and  the  larger  the  amount  of  taxa- 
tion imposed  upon  our  farmers  for  the  maintenance  of  transport- 
ers, the  greater  becomes  the  recklessness  of  those  who  gain  their 
living  out  of  that  taxation?  Look  back  to  the  last  free  trade 
period — that  from  1837  to  1841 — and  you  will  find  phenomena  cor- 
responding precisely  with  those  which  are  now  exhibited,  although 
not  so  great  in  magnitude.  At  present,  the  utter  recklessness — the 
total  absence  of  conscientious  feeling— here  exhibited,  is  such  as 
to  astonish  the  thinking  men  of  Europe.  Railroad  accidents  have 
become  so  numerous  as  scarcely  to  attract  even  the  momentary 
attention  of  the  reader,  and  the  loss  of  life  becomes  greater  from 
year  to  year.  Steamers  -are  exposed  to  the  storms  of  the  lakes 
that  are  scarcely  fit  to  navigate  our  rivers  Ships  that  are  unfit  for 
carrying  insurable  merchandise,  are  employed  in  the  carriage  of  un- 
fortunate passengers,  they  being  the  only  commodity  for  whose 
safe  delivery  the  ship-owner  cannot  be  made  responsible.  Week 
after  week  the  records  of  our  own  and  foreign  courts  furnish  new 
evidence  of  decline  in  the  feeling  of  responsibility  which,  thirty 
years  since,  characterized  the  owners  of  American  ships,  and  the 
men  therein  employed. 

"  Look  where  we  may,  Mr.  President,  on  the  sea  or  on  the  land, 
evidences  of  demoralization  must  meet  our  view.  '  Stores  and 
dwellings' — and  here  I  give  the  words  of  a  New  York  journal — 
'  are  constructed  of  such  wretched  materials  as  scarcely  to  be  able 
to  sustain  their  own  weight,  and  with  apologies  for  walls  which 
tumble  to  the  ground,  after  being  exposed  to  a  rain  of  a  few  hours' 
duration,  or  to  a  wind  which  possesses  sufficient  force  to  set  the 
dust  of  the  highways  in  motion.  Entire  blocks  of  edifices  are  put 
up,  with  the  joists  of  all  so  connected  with  each  other,  as  to  form  a 
complete  train  for  the  speedy  communication  of  fire  from  one  to 
another.  Joists  are  built  into  flues,  so  that  the  ends  are  exposed 


21 

to  becoming  first  heated,  and  then  ignited  by  a  flying  spark.  Hows 
of  dwellings  and  warehouses  are  frequently  covered  with  a  single 
roof,  which  has  not,  in  its  whole  extent  of  combustible  material,  a 
parapet  wall,  or  other  contrivance,  to  prevent  the  spread  of  the 
flames  in  the  event  of  a  conflagration.' 

"  The  feeling  of  responsibility,  Mr.  President,  grows  with  the 
growth  of  real  civilization.  It  declines  with  the  growth  of  that 
mock  civilization,  but  real  barbarism,  which  has  its  origin  in  the 
growing  necessity  for  ships,  wagons,  and  other  machinery  of  trans- 
portation. The  policy  of  the  central  government  tends  steadily 
towards  its  augmentation,  and  hence  it  is  that  American  shipping 
so  steadily  declines  in  character,  and  in  the  proportions  which  it 
bears  to  that  of  the  foreigners  with  whom  we  are  required  to 
place  ourselves  in  competition. 

"  Two  years  since,  we  were  told,  that  our  shipping  already  ex- 
ceeded 5,000,000  tons;  that  we  had  become  the  great  maritime 
power  of  the  world ;  and,  of  course,  that  this  great  fact  was  to  be 
received  as  evidence  of  growing  wealth  and  power.  Last  }rear, 
however,  exhibited  it  as  standing  at  only  4,871,000  tons,  and  future 
years  are  likely  to  show  a  large  decrease — ships  having  become 
most  unprofitable.  More  than  four-fifths  of  the  products  of  Western 
farms  and  Southwestern  plantations,  are,  as  we  have  seen,  taken 
for  the  support  of  railroads  and  ships ;  and  yet,  the  roads  are  bank- 
rupt, while  the  ships  have  done  little  more,  for  some  years  past, 
than  ruin  the  men  who  owned  them.  Such  being  the  case,  it  seems 
little  likely,  that  it  is  by  means  of  sailing  ships  we  are  to  acquire 
that  control  of  the  commerce  of  the  world,  so  confident!}7"  promised 
when,  in  1846,  we  were  led  to  abandon  the  policy  which  looked  to 
the  creation  of  a  domestic  commerce  as  the  true  foundation  of  a 
great  foreign  one.  What  are  the  prospects  in  regard  to  that  higher 
description  of  navigation  which  invokes  the  aid  of  steam,  will  be 
shown  in  another  letter." 

That  letter  will  be  given  in  my  next,  and,  meanwhile,  I  remain 
with  great  respect, 

Yours  very  truly, 
GEN.  U.  S.  GRANT.  HENRY  C.  CAREY. 

PHILADELPHIA,  December  10,  1868. 


LETTER   FOURTH. 

DEAR  SIR: — 

Steam  is  rapidly  superseding  sails,  and  the  day  is  fast  approach- 
ing when  the  latter  will  almost  entirely  have  disappeared  from  the 
ocean ;  yet  are  we  at  this  moment  nowhere  in  the  race.  The  time 
has  been  when  we  built  ships  for  carriage  of  the  produce  of  other 
lauds,  but  the  day  has  now  arrived  when  we  arc  almost  wholly  de- 
pendent on  British  and  German  steamers  for  commerce  with  the 
world,  and  for  carnage  of  our  own.  Why  this  is  so  can,  I  think, 


22 

be  readily  understood  by  all  who  care  to  study  the  state  of  things 
that  existed  ten  years  since,  the  date  at  which  the  following  letter 

being  the  second  of  those  referred  to  in  my  last — was  addressed 

to  President  Buchanan: — 

"Every  improvement  in  the  construction  of  a  ship  tends  to 
lessen  the  proportion  borne  by  her  tonnage,  to  the  weight  of  the 
commodities  to  be  moved.  Every  improvement  in  the  quality  of 
the  commodities  moved,  tends  to  augment  the  proportions  borne 
by  the  money  value  transported,  to  the  tonnage  of  the  ships  re- 
quired for  its  transportion.  Here,  Mr.  President,  is  a  simple  princi- 
ple by  aid  of  which  we  may,  perhaps,  be  enabled  to  arrive  at  some 
conclusion  in  reference  to  the  tendency  of  our  present  policy — pro- 
gress towards  civilization  having,  everywhere,  manifested  itself  in 
a  diminution  in  the  proportions  borne  by  the  machinery  of  trans- 
portation, to  the  value  of  the  things  transported. 

"In  the  first  year  which  followed  adoption  of  the  Compro- 
mise revenue  tariff,  that  of  1834-5,  we  sent  abroad,  cotton  and 
tobacco,  food  and  lumber,  to  the  amount  of  $92,000,000 ;  and  in 
that  3rear,  the  shipping,  domestic  and  foreign,  that  cleared  for  for- 
eign ports,  amounted  to  2,030,000  tons.  Six  years  later,  in  1840- 
41,  when  the  strictly  revenue  provision  of  that  tariff  had  but  begun 
to  operate,  we  exported,  of  the  same  rude  products,  $98,000,000 — 
the  quantity  of  shipping  clearing  from  our  ports  having,  in  the 
same  period,  risen  to  2.353,000  tons.  Two  years  since,  after  ten 
years  experience  of  the  revenue  tariffs  of  1846  and  1857,  the  total 
value  of  those  exports  was  $230,000,000,  while  the  quant^  of  ship- 
ping leaving  for  foreign  ports  amounted  to  little  less  than  seven 
millions  of  tons — the  increase  in  the  former,  in  twenty-years,  having 
been  but  150  per  cent.,  while  that  of  the  latter  had  been  but  little 
short  of  350  per  cent. 

"If  there  is,  Mr.  President,  any  single  proposition  in  social 
science  that  cannot  be  disputed  it  is  that  wealth,  civilization,  and 
power,  increase  in  the  ratio  of  the  diminution  of  the  machinery  re- 
quired for  performing  the  work  of  transportation.  On  the  turnpike, 
a  single  horse  performs  the  work  that  before  had  been  done  by  two  ; 
and,  on  the  railroad,  a  single  car  transports  as  great  a  weight  as, 
at  first,  had  been  done  by  hundreds  of  horses  and  men,  carts  and 
wagons.  With  every  movement  in  that  direction,  land  acquires 
money  value,  and  man  becomes  more  free.  With  each  and  every 
one  in  the  opposite  direction,  the  value  of  land  declines,  and  man 
becomes  more  and  more  enslaved. 

"The  first  and  heaviest  tax,  Mr.  President,  to  be  paid  by  land 
and  labor  is  that  of  transportation ;  and  it  is  the  only  one,  to  which 
the  claims  of  the  State  itself  are  forced  to  yield  precedence.  In- 
creasing in  geometrical  proportion  as  the  distance  from  market 
increases  arithmetically,  therefore  it  is,  that  agreeably  to  tables 
recently  published,  corn  that  would  produce  at  market  $24.75  per 
ton,  is  worth  nothing  at  a  distance  of  only  a  hundred  and  sixty 
miles,  when  the  communication  is  by  means  of  the  ordinary  wagon 
road — the  cost  of  transportation  being  equal  to  the  selling  price. 
By  railroad,  under  ordinary  circumstances,  that  cost  is  but  $2.40 — 
leaving  to  the  farmer  $22.35,  as  the  amount  of  tax  saved  to  him  by 


23 

the  construction  of  the  road;  and  if  we  now  take  the  product  of  an 
acre  of  land  as  averaging  but  a  ton,  the  saving  is  equal  to  interest, 
at  G  per  cent.,  on  $370  an  acre.  Assuming  the  product  of  an  acre 
of  wheat  to  be  twenty  bushels,  the  saving  is  equal  to  the  interest  on 
$200  ;  but,  if  we  take  the  more  bulky  products — ha}-,  potatoes,  and 
turnips,  it  will  be  found  to  amount  to  thrice  that  sum.  Hence  it  is, 
that  an  acre  of  land,  near  London,  sells  for  thousands  of  dollars, 
while  one  of  equal  quality  may  be  purchased  in  Iowa,  or  Wiscon- 
sin, for  little  more  than  "a  single  dollar.  The  owner  of  the  first 
enjoys  the  vast  advantage  of  the  endless  circulation  of  its  pro- 
ducts— taking  from  it  several  crops  in  the  year  and  returning 
to  it  at  once,  a  quantity  of  manure  equal  to  all  he  had  abstracted  ; 
and  thus  improving  his  land  from  year  to  year.  He  is  making  a 
machine;  whereas,  his  western  competitor,  forced  to  lose  the 
manure,  is  destroying  one.  Having  no  transportation  to  pay,  the 
former  can  raise  those  things  of  which  the  earth  yields  largely — as 
potatoes,  carrots,  or  turnips ;  or  those  whose  delicate  character 
forbids  that  they  should  be  carried  to  distant  markets ;  and  thus 
does  he  obtain  a  large  reward  for  that  continuous  application  of  his 
faculties,  and  of  his  land,  which  results  from  the  power  of  combina- 
tion with  his  fellow-men. 

"  In  the  case  of  the  latter,  all  is  widely  different.  Having  heav}^ 
transportation  to  pay,  he  cannot  raise  potatoes,  turnips,  or  hay, 
because  of  them  the  earth  yields  by  tons ;  as  a  consequence  of 
which,  they  would  be  almost,  even  when  not  wholly,  absorbed  on 
the  road  to  market.  He  may  raise  wheat,  of  which  the  earth  yields 
by  bushels ;  or  cotton,  of  which  it  yields  by  pounds ;  but  if  he 
raise  even  Indian  corn,  he  must  manufacture  it  into  pork  before  the 
cost  of  transportation  can  be  so  far  diminished  as  to  enable  him  to 
obtain  a  proper  reward  for  labor.  Rotation  of  crops  being  there- 
fore a  thing  unknown  to  him,  there  can  be  no  continuity  of  action 
in  either  himself  or  his  land.  His  corn  occupies  the  latter  but  a 
part  of  the  year,  while  the  necessity  for  renovating  the  soil,  by 
means  of  fallows,  causes  a  large  portion  of  his  farm  to  remain 
altogether  idle — although  the  cost  of  maintaining  roads  and  fences 
is  precisely  the  same  as  if  every  acre  were  fully  occupied. 

u  His  time,  too,  being  required  only  for  certain  portions  of  the 
year,  much  of  it  is  altogether  lost,  as  is  that  of  his  wagon  and 
horses,  the  consumption  of  which  latter  is  just  as  great  as  if  they 
were  alwa37s  at  work.  He  and  they  are  in  the  condition  of  steam- 
engines  constantly  fed  with  fuel,  while  the  engineer  as  regularly 
wastes  the  steam  that  is  produced,  a  proceeding  involving  heavy 
loss  of  capital.  Further  stoppages  of  employment,  both  for  his 
land  and  for  himself,  resulting  from  changes  in  the  weather,  are 
consequent  upon  this  limitation  in  the  variety  of  things  that  may 
be  cultivated.  His  crop,  perhaps,  requires  rain  that  does  not  come, 
and  his  corn,  or  cotton,  perishes  of  drought.  Once  grown,  it  requires 
light  and  heat,  but  in  their  place  come  clouds  and  rain ;  and  it  and 
he  are  nearly  ruined.  The  farmer  near  London,  or  Paris,  is  in  the 
condition  of  an  underwriter  who  has  a  thousand  risks,  some  of  which 
are  maturing  every  day ;  whereas,  the  distant  one  is  in  that  of  a 
man  who  has  risked  his  whole  fortune  on  a  single  ship.  Having 


24 

made  the  voyage  she  arrives  at  the  entrance  of  her  destined  port, 
when  striking  on  a  rock,  she  is  lost,  and  her  owner  is  ruined.  Pre- 
cisely such  is  the  condition  of  the  farmer  who,  having  all  at  risk 
on  his  single  crop,  sees  it  destroyed  by  blight,  or  mildew,  almost  at 
the  moment  when  he  had  expected  to  make  his  harvest.  With  iso- 
lated men,  all  pursuits  are  extra-hazardous.  As  they  are  enabled 
to  approach  each  other  and  combine  their  efforts,  the  risks  diminish, 
until  they  almost  altogether  disappear.  Combination  of  action  thus 
makes  of  society  a  general  insurance  office  by  help  of  which,  each 
and  all  of  its  members  are  enabled  to  secure  themselves  against 
almost  every  imaginable  risk. 

"  Great,  however,  Mr.  President,  as  are  these  differences,  they 
sink  almost  into  insignificance  compared  with  that  which  exists 
in  reference  to  maintenance  of  the  powers  of  the  land.  The  farmer 
distant  from  market  is  alwa}rs  selling  the  soil,  which  constitutes 
his  capital;  whereas,  the  one  near  London  not  only  returns  toJiis 
land  the  refuse  of  its  products,  but  adds  thereto  the  manure  re- 
sulting from  consumption  of  the  vast  amount  of  wheat  brought 
from  Russia  and  America — of  cotton  brought  from  Carolina  and 
India — of  sugar,  coffee,  rice,  and  other  commodities  yielded  by  the 
tropics  —  of  lumber  and  of  wool,  the  products  of  Canada  and 
Australia — not  only  maintaining  the  powers  of  his  land,  but  in- 
creasing them  from  year  to  year. 

"The  more  perfect  the  power  of  combination,  the  greater  is  the 
yield  of  the  land ;  the  higher  are  the  prices  of  the  rude  products 
of  the  soil ;  the  smaller  is  the  bulk  of  the  commodities  to  be  trans- 
ported ;  and  the  larger  are  the  proportions  borne  by  their  value  to 
the  machinery  required  for  their  transportation.  That,  Mr.  Presi- 
dent, is  the  road  towards  civilization;  but  it  is,  also,  the  very  oppo- 
site of  the  road  that  we  ourselves  are  travelling,  the  quantity  of 
machinery  required. for  the  work  of  transportation  increasing  with 
a  rapidity  far  greater  than  that  which  marks  the  growth  of  money 
values.  This  latter  being  the  certain  road  towards  barbarism,  we 
need  look  but  little  further  for  the  causes  of  the  decline  in  morals, 
wealth,  and  power,  now  so  rapidly  in  progress  throughout  the 
Union. 

"Power  to  command  the  use  of  improved  machinery  grows  with 
the  growth  in  money  value  of  the  things  requiring  to  be  transported, 
the  farmer,  whose  proximity  to  the  mill  enables  him  to  send  his  grain 
to  market  in  the  form  of  flour  being  far  more  able  to  contribute  to 
the  improvement  of  roads,  than  his  fellow-farmer  who  is  forced  to 
send  it  in  that  of  wheat.  It  diminishes  as  the  things  to  be  trans- 
ported decline  in  value,  and  hence  the  weakness  of  countries  like 
Portugal,  Turkey,  and  India,  that  are  becoming  more  and  more  de- 
pendent on  distant  markets.  It  diminishes  with  us,  and  hence  it  is 
that  our  dependence  on  foreign  countries,  even  for  efficient  mea.ns 
of  transportation,  so  rapidly  increases. 

"  More  than  twent}r  years  have  now  elapsed  since  the  arrival  of 
the  Great  Western  steamer,  and  the  establishment  of  the  fact  that 
we  might  avail  ourselves  of  the  power  of  steam  for  passage  of  the 
broad  Atlantic.  For  nearty  all  that  time  we  have  been  struggling 
to  obtain  steam  communication,  by  means  of  American  ships,  with 


25 

Europe,  the  government  aiding  in  the  effort  to  the  extent  of  many 
millions.  What,  however,  has  been  the  result  of  all  our  efforts? 
Ship  after  ship  has  been  lost,  until  confidence  in  American,  steamers 
has  almost  disappeared,  and  with  it  the  lines  of  steamers.  The 
Collins  line,  as  it  still  is  called,  now  dispatches  a  single  ship  per 
month,  and  that,  too,  chiefly  owned  in  Europe.  The  Havre  line 
dispatches  a  monthly  ship.  The  Bremen  line  has  wholly  disap- 
peared. Mr.  Vanderbilt  has  yet  three  ships  engaged  in  the  Euro- 
pean trade,  but  the  recent  accident  to  one  of  them  can  scarcely  fail 
to  be  felt  injuriously  by  all,  annihilating  the  little  confidence  that 
previously  had  existed.  The  day  is  fast  approaching,  Mr.  Presi- 
dent, when  no  single  steamer  carrying  the  American  flo.g  will  float 
upon  the  ocean,  except  government  ships,  and  the  very  few  private 
ones  engaged  in  the  coasting  trade,  in  which  foreign  competition  is 
wholly  interdicted.  Such  being  the  facts,  and  such  the  prospects, 
is  it  probable  that  we  shall  long  maintain  that  superiority  on 
the  ocean  which  so  certainly  existed  at  the  time  when  the  general 
government  entered  upon  the  career  of  centralization  ?  It  would 
seem  not.  Beaten  in  agriculture,  and  beaten  in  manufactures,  we 
are  likely  to  be  even  yet  more  thoroughly  distanced  in  regard  to 
ships;  and  for  the  reason  that  our  policy  tends  steadily  towards 
lessening  the  value  of  the  commodities  seeking  to  be  transported. 

"The  French  policy — looking,  as  it  does,  to  the  emancipation  of 
land  and  labor  from  the  tax  of  transportation — is  directly  the 
reverse  of  ours.  We  tax  ourselves  for  maintenance  of  the  mil- 
lions of  tons  of  shipping  required  for  transport  of  merchandise  to 
be  given  to  France,  in  exchange  for  millions  upon  millions  of  tons 
of  food  and  other  commodities,  so  reduced  in  bulk  that  their 
weight,  in  tons,  is  counted  by  thousands.  Freed  b}^  that  reduction 
from  all  the  cost  of  transportation,  France  is  enabled  to  invoke  the 
aid  of  steam,  and  to  such  extent,  too,  that  the  arrivals  of  her  own 
steamers,  in  her  own  ports,  amounted  in  1856  to  no  less  than  8000 
tons  per  week,  and  more  than  four  hundred  thousand  in  the  year. 

"France,  Mr.  President,  is  carrying  out  your  own  most  excel- 
lent views  in  regard  to  commercial  policy — laying  a  broad  founda- 
tion of  domestic  commerce,  as  a  means  of  obtaining  the  largest 
power  of  intercourse  with  the  outer  world.  We,  on  the  contrary, 
are  destroying  the  domestic  commerce,  in  the  vain  hope  of  thereby 
building  up  a  great  foreign  one.  Why  have  wre  no  steamers  run- 
ning to  Rio,  to  Buenos  Ayres,  to  Montevideo,  to  Valparaiso,  to 
Lima,  or  Australia?  Because  we  have  little  to  sell,  except  those 
rude  products  which  the  people  of  Brazil  or  Chili  cannot  use,  and 
do  not  need  to  buy.  Before  they  can  do  so  those  commodities  must 
pass  through  the  looms  of  Manchester  or  Mulhausen,  and  hence  ifc 
is  that  nearly  all  our  intercourse  with  the  world  is  burthened  with 
costs  of  transportation  so  enormous  that  our  farmers  are  generally 
poor,  although  themselves  owners  of  the  land.  In  search  of 
trade  we  fit  out  expeditions  against  Japan,  involve  ourselves  in 
disputes  with  Paraguay  and  Buenos  Ayres,  explore  African  and 
South  American  rivers,  and  maintain  an  enormous  diplomatic 
establishment  throughout  this  continent;  and  yet  have  scarcely 
anything  to  sell,  except  to  the  people  of  France  and  England. 


26 

"  What  we  need,  Mr.  President,  is  that  real  free  trade  which  con- 
sists in  maintaining  direct  intercourse  with  the  world  at  large; 
but  that  we  cannot  have  so  long  as  we  shall  continue  to  export 
our  commodities  in  their  rudest  state.  The  farmer  who  has  but 
one  mill  at  which  to  grind  his  grain  has  no  freedom  of  trade.  The 
miller  and  the  baker  have  it,  they  being  free  to  sell  to  whom  they 
please.  Our  farmers  and  planters  have  none  of  it,  being  compelled 
to  send  their  products  to  the  distant  mills  before  they  and  their 
neighbors  can  make  exchanges,  even  among  themselves.  They 
need,  as  you  so  well  have  seen,  that  real  free  trade  which  would 
enable  the  planter  of  Mississippi  to  exchange  with  the  farmer  of 
Illinois,  receiving  cloth,  lead,  and  iron  in  exchange  for  sugar  and 
cotton.  That,  as  you  so  well  have  said,  is  the  free  trade  we 
want.  That  we  may  have  it,  we  must  diversify  the  employments 
of  our  people;  we  must  enable  them  to  combine  their  efforts;  we 
must  relieve  our  farmers  from  a  tax  of  transportation  greater  than 
is  required  for  maintaining,  ten  times  over,  all  the  armies  of  Eu- 
rope;  We  must  enable  ourselves  to  pay  our  debts  to  the  land,  and 
thus  obtain  a  real  agriculture,  in  place  of  the  system  of  spoliation 
that  now  exists ;  we  must  establish  a  balance  of  trade  in  our  favor, 
enabling  us  to  retain  the  precious  metals  and  to  maintain  the  real 
specie  currency  that  you  so  much  desire  to  see  established.  Those 
things  done,  we  shall  be  able  to  command  the  use  of  machinery  of 
exchange  of  the  highest  order — fleets  of  steamers  taking  the  place 
of  sailing  ships,  and  the  use  of  money  becoming  obtainable  without 
the  payment  of  a  higher  interest  than  is  paid  in  any  other  country 
of  the  world  claiming  to  be  held  as  civilized.  Such,  Mr.  President, 
is  the  real  road  to  wealth  and  power ;  but,  as  you  have  seen,  all 
our  movements  are  in  the  reverse  direction." 

Forty  years  since  the  now  great  Germanic  Empire  owned  less 
than  a  thousand  ships.  Two  years  since  the  number  had  already 
more  than  tenfold  increased,  and  the  day  seems  near  at  hand  when 
it  will  again  be  greatly  increased  by  the  inclusion  of  Holland 
within  the  limits  of  that  wonderfully  growing  Empire.  Occupying 
now  the  first  place  on  the  land  of  Europe,  it  is  being  rapidly  pre- 
pared for  occupying  one  almost  as  distinguished  on  the  ocean;  and 
for  thus  perfecting  a  change  of  position  wholly  without  parallel  in 
the  annals  of  the  world,  to  have  been  accomplished  in  so .  brief  a 
period. 

To  what,  then,  has  all  this  been  due  ?  To  the  simple  fact  that 
enlightened  German  men  have  looked  to  the  creation  of  a  great 
domestic  commerce  as  foundation  on  which  to  build  a  great  foreign 
one,  exchanging  with  the  world  at  large  cloth  and  paper  instead  of, 
as  formerly,  sending  wheat,  rags,  and  wool  to  the  limited  market 
of  England.  Then,  the  whole  cost  of  transportation  was  borne  by 
poor  and  wretched  German  farmers.  Now,  it  is  borne  by  those 
American  and  Australian  farmers  to  whom  Germany  sends  cloth 
and  paper  to  be  exchanged  for  wool  and  cotton. 

Germany  can  now  have  that  real  free  trade  which  results  from 
finishing  commodities  and  sending  them,  so  finished,  to  all  the 
ports  of  the  civilized  and  barbaric  world.  We,  on  the  contrary, 


27 

have  had  that  British  free  trade  which  has  required  that  our  farmers 
and  planters  should  make  nearly  all  their  exchanges  with  the  outer 
world  in  the  single  and  diminutive  market  of  England.  They  have 
sought  the  establishment  of  industrial  independence,  while  we  have 
sought  a  perpetuation  of  that  industrial  dependence  in  the  face  of 
which  there  can  be  no  freedom  for  either  man  or  nation. 

Let  me  now  pray  you,  my  dear  sir,  to  study  the  Reports  on  Com- 
merce and  Navigation,  and  to  mark  the  fact  that,  while  cotton  stands 
alone  in  quantity,  oil  stands  almost  alone  in  the  fact  that  we  send 
it  abroad  fit  for  use.  Turn  next  to  the  oil  column,  and  see 
that  with  regard  to  it,  and  it  almost  alone,  we  have  that  real  free 
trade  which  results  from  power  to  make  direct  exchanges,  sending 
it  to  every  part  of  the  civilized  world.  Turn  next  to  the  cotton 
column,  and  see  that  it  gives  us  little  or  no  commerce  except  with 
England,  France,  and  Germany,  a  score  or  two  of  ships  being  fully 
able  to  transport  all  that  goes  to  other  countries. 

Germany  has  been  building  a  true  pyramid,  of  which  a  real  agri- 
culture was  to  be  the  basis  and  a  foreign  trade  the  apex.  We  have 
been  building  an  inverted  one,  subjecting  our  farmers  and  planters 
to  a  tax  of  transportation  so  oppressive  that  the  top-heavy  edifice 
at  length  toppled  over  and  came  near  burying  all  under  the  ruins. 

So  long  as  we  shall  insist  upon  limiting  ourselves  to  the  export 
of  raw  produce — the  proper  work  of  a  semi-barbarous  population — 
our  exchanges  must  continue  to  be  mainly  made  with  those 
European  countries  which  have  already  possessed  themselves  of 
steam  navigation;  and  so  long  must  we  continue  in  our  present 
state  of  helpless  dependence.  Whenever  we  shall  have  deter- 
mined to  export  cloth  instead  of  cotton,  iron  in  place  of  corn,  and 
machinery  in  the  place  of  tobacco ;  whenever  we  shall  have  made 
ourselves  industrially  independent ;  then,  and  not  until  then,  shall 
we  regain  that  place  on  the  ocean  which  we  had  occupied  in  the 
days  when  the  now  powerful  Germany  was  a  collection  of  scraps 
and  fragments  of  territory,  controlled  in  turn  by  France  and  Eng- 
land, Austria,  or  Russia. 

To  the  development  of  her  internal  resources  was  England  in- 
debted for  that  control  of  the  ocean  which  warranted  her  in  saying 
that  "  not  a  sail  but  by  permission  spreads."  So  long  as  she  held 
it  there  was  there  but  little  peace.  Desiring  now  to  enable  our 
people  peacefully  and  freely  to  communicate  with  the  whole  outer 
world,  we  shall  find  that  the  road  by  which  we  are  to  move  in  that 
direction  leads  through  the  establishment  of  such  perfect  protec- 
tion as  will  enable  us  fully  to  develop  the  wonderful  mineral  re- 
sources by  which,  more  than  by  anything  else,  our  Union  is  dis- 
tinguished from  all  other  countries  of  the  world.  How  that 
protection  is  to  affect  our  growth  in  numbers  I  propose  to  show  in 
another  letter,  meanwhile  remaining,  very  respectfully,  yours, 

HENRY  C.  CAREY. 

GEN.  U.  S.  GRANT. 

PHILADELPHIA,  Dec.  10,  1868. 


28 


LETTER  FIFTH. 

DEAR  SIR: — 

That  peace  may  prevail  throughout  the  States  recently  in  rebel- 
lion, and  that  harmony  may  be  established  among  the  various  por- 
tions of  the  Union,  it  is  indispensable  that  throughout  the  South 
and  Southwest  employments  be  diversified  ;  that  the  habit  of  asso- 
ciation and  combination  for  useful  purposes  be  enabled  to  arise ; 
that  mines  be  opened  and  furnaces  built ;  that  the  wonderful  natu- 
ral resources  of  the  country  lying  between  the  Potomac  and  the 
Rio  Grande  be  developed  ;  that  the  market  be  brought  home  to  the 
farmers  and  planters  of  that  great  region  of  country  ;  that  between 
the  various  portions  of  the  Union  there  be  provided  means  of  cheap 
and  rapid  intercourse ;  and,  finally,  that  we  establish  among  our- 
selves that  great  internal  commerce  to  which  Germany,  as  has  been 
shown,  stands  now  indebted  for  the  commanding  position  she  so 
speedily,  by  aid  of  the  protective  policy,  has  taken  among  the 
nations  of  the  world. 

That  to  such  development  it  is  we  are  to  look  for  peace  is  from 
hour  to  hour  becoming  more  clearly  obvious  to  the  people  of  the 
Southern  States,  and  hence  it  is  that  each  successive  day  brings 
with  it  new  evidence  of  their  anxious  desire  for  promotion  of  immi- 
gration. West  and  Northwest,  however,  we  find  competition 
therein  with  the  South  and  Southwest,  millions  upon  millions  of 
acres,  capable  of  contributing  on  the  largest  scale  to  the  comfort 
and  happiness  of  our  people,  lying  there  wholly  idle,  even  in  states 
that  have  already  long  been  represented  in  the  councils  of  the 
Union.  To  meet  all  these  demands  we  need  to  import  that  only 
commodity  which  Europe  stands  prepared  to  give  to  us  without  de- 
manding gold  in  payment— those  only  machines  that  increase  in 
number  and  power  the  more  they  are  usefully  employed — MEN, 
WOMEN,  AND  CHILDREN.  What,  however,  are  the  circumstances  under 
which  such  machines,  more  valuable  than  any  engines,  are  most  led 
to  find  a  market  among  us  for  their  service  ?  Let  us  see  ! 

Prior  to  the  establishment  of  the  first  really  protective  tariff, 
that  of  1828,  immigration  had  been  altogether  insignificant,  that  of 
the  whole  decade  ending  in  1829  having  given  us  little  more  than 
100,000  persons.  So  soon,  however,  as  that  tariff  had  commenced 
to  take  effect  immigration  began  to  rise,  and  so  strong  and  rapid 
was  its  growth  that  four  years  later  it  had  already  reached  the 
extraordinary  figure  of  65,000,  that  large  number  of  persons  having 
been  attracted  by  the  great  demand  for  labor  which  protection  had 
created.  Protection  having  been  then  abandoned,  we  find  immi- 
gration to  have  become  unstead3r  anc^  irregular,  the  mean  num- 
ber for  the  decade  ending  in  1844  having  been  but  10,000.  No 
sooner,  however,  had  the  tariff  of  1842  become  fairly  active  than 
we  find  the  effect  of  protection  exhibiting  itself  in  the  rapid  rise  of 


29 

immigration  from  74,000  in  1844,  to  no  less  than  234,000  in  1847 — 
thus  furnishing  proof  conclusive  of  rapid  increase  in  the  demand 
for,  and  compensation  of,  all  human  service.  Under  the  revenue 
tariff  of  1840-41  two  men  had  everywhere  been  seeking  employ- 
ment at  the  hands  of  one  employer.  Under  that  of  1842  all 
had  changed,  employers-  having  everywere  been  compelled  to  seek 
for  labor,  and  liberally  to  pay  for  the  service  needed  to  be  rendered. 
The  discovery  of  California  gold  deposits  furnished  a  new  va- 
riety of  employment  with  large,  but  temporary,  increase  in  the 
power  to  pay  for  labor,  and  under  that  stimulus  immigration  con- 
tinued to  increase  until,  in  1854,  it  passed  beyond  400, 000.  Thence- 
forward, however,  under  the  unhappy  influence  of  the  revenue 
tariffs  of  1846  and  1857,  it  rapidly  declined  until  in  1860-61  it  had 
fallen  to  112,000,  or  little  more  than  its  amount  twenty  years  before. 
British  free  trade  now  gave  us  rebellion  with  further  decline  of  im- 
migration, which  stood  in  1861-2  at  less  than  70,000.  Secession,  how- 
ever, gave,  and  most  happily  gave,  to  the  loyal  States  the  power  of 
self-protection,  and  now  we  find  the  effect  of  the  protective  tariff  of 
1861  in  the  following  figures  exhibiting  the  number  of  persons  who 
in  the  succeeding  years  were  hither  led  to  seek  a  market  for  their 
labor,  to  wit : — 

1862-3 139,170 

1863-4 193,754 

18G4-5 180,679 

1SG5-6 330,725 

1866-7 311,994 

Extraordinary  as  is  the  growth  here  exhibited,  it  is  far  from  pre- 
senting the  entire  truth,  the  number  of  persons  who  have  trans- 
ferred themselves  from  the  unprotected  British  colonies  to  our  pro- 
tected States  having  been  so  large  that  were  it  added  to  the  figures 
shown  above,  the  total  for  the  last  three  years  would  probably  ex- 
ceed a  million. 

The  production  of  that  million  of  people  had  cost  the  States  of 
Europe  at  least  A  THOUSAND  MILLIONS  OP  DOLLARS,  yet  did  they 
furnish  them  in  free  gift  to  our  Union.  Had  they  given  as  much  in 
engines,  or  other  machinery,  it  would  have  been  regarded  as  a  won- 
derful addition  to  the  wealth  of  the  country ;  and  yet,  engines  wear 
out  with  use,  whereas  men  and  women  double  and  quadruple  them- 
selves, the  quantity  of  such  machinery  increasing  more  rapidly  in 
almost  the  exact  proportion  in  which  their  services  are  made  avail- 
able to  the  purposes  of  the  nation. 

2.  By  aid  of  the  protective  tariff  of  1842  immigration,  as  we  see, 
more  than  trebled  itself  in  the  short  period  from  1844  to  1847, 
having  been  carried  up  from  74,000  to  234,000.  Had  that  tariff 
been  maintained,  and  had  we  continued  to  mine  our  own  coal, 
smelt  our  own  ores,  and  to  make  our  own  lead,  copper,  and  iron, 
it  would,  with  the  aid  of  California  gold  discoveries,  have  been 
carried  beyond  half  a  million,  and  it  would  have  since  stood 
there,  at  the  least,  giving  with  the  natural  increase  a  population 
ten  millions  greater  than  ice  have  at  present.  Forgetting,  how- 
ever,, as  they  have  alwa}'s  done,  the  troubles  from  which  they  had 
so  recently  been  redeemed,  our  people  had  twice  again  repudiated 


30 

protection,  and  had  thus  reduced  immigration,  in  the  whole  period 
of  Mr.  Buchanan's  administration,  to  an  average  of  134,000,  or 
little  more  than  half  a  million  in  all.  The  revenue  tariff  policy  of 
Mr.  Walker  and  his  friends  then  gave  us  a  rebellion  that  has  cost 
us,  white  and  black,  so  great  a  destruction  of  life  that  more  than 
all  the  immigration  of  Mr.  Lincoln's  period  of  presidential  life  was 
required  to  make  amends  for  it. 

Of  all  the  legislative  acts  on  record  there  is  scarcely  one  that 
has  worked  an  amount  of  injury  so  large  as  that  which  has  result- 
ed from  the  repeal  of  the  tariff  of  1842,  forced  upon  the  country  by 
Mr.  Walker  and  his  friends.  But  for  them  our  population  would 
be  now,  at  the  least,  one-fourth  greater  than  it  is  at  present,  and 
our  wealth  more  than  twice  as  great !  But  for  them,  we  should 
long  since  have  achieved  a  perfect  industrial,  financial,  and  political 
independence !  But  for  them  iron  would  be  so  cheap  that  we 
should  be  consuming  millions  of  tons,  while  exporting  it  to 
half  the  world!*  But  for  them  we  should  have  had  no  civil 
war!  But  for  them  the  slave  would  have  been  gradually  be- 
coming free,  while  his  master  would  have  been  becoming  rich ! 
But  for  them  harmony  would  now  prevail  throughout  the  Union,  and 
the  stars  and  stripes  at  this  moment  be  floating  over  the  largest 
mercantile  marine  the  world  had  ever  seen  !  But  for  them  the  de- 
mand on  Europe  for  men,  women,  and  children,  to  take  part  in  the 
great  work  of  developing  our  wonderful  resources,  would  be  now  so 
great  that  capital  would  be  everywhere  seeking  labor,  while  labor 
would  be  everywhere  dictating  to  capital  the  terms  on  which  it 
could  be  allowed  to  have  its  aid.  That  protection  and  freedom 
travel  hand  in  hand  together  is  proved  by  all  the  facts  of  our 
histoiy,  and  the  man  who  strikes  at  the  former  cannot  claim  to  be 
otherwise  than  an  enemy  to  the  latter. 

3.  In  accordance  with  the  habit  of  the  time,  my  dear  sir,  I  have 
spoken  of  protective  tariffs  on  one  hand,  and  revenue  tariffs  on  the 
other  ;  and  yet,  when  you  shall  have  studied  the  facts  which  will 
now  be  given,  you  will,  as  I  think,  find  yourself  convinced  that  the 
real  revenue  tariff  is  a  protective  one,  the  free  trade  tariff,  so  called, 
being  the  one  that  so  far  depletes  the  treasury  as  naturalty  to  bring 
about  the  state  of  weakness  and  of  bankruptcy  which  now  exists  in 
each  and  all  of  the  communities  of  the  world  that  have  found  them- 
selves unable  or  unwilling  to  defend  themselves  against  the  British 
free  trade  system. 

In  the  four  years  by  which  the  passage  of  the  semi-protective 
tariff  of  1824  had  been  preceded  the  customs  revenue  averaged  but 
$16,000,000,  and  trivial  as  were  the  expenditures  of  that  period, 
they  so  far  exceeded  the  revenue  as  to  make  it  necessary  to  borrow 
$10,000,000  in  1824  and  1825.  In  the  four  years  1826-29,  with 
only  semi-protection,  the  customs  revenue  rose  to  $32,000,000,  and 
the  necessity  for  borrowing  wholly  passed  away.  Under  the  realty 
protective  tariff  of  1828  it  rose  to  $26,000,000,  and  the  public  debt 
was  then  extinguished.  The  revenue  tariff,  so  called,  of  1840-42 

*  Of  railroad  iron  alone  our  import  iu  the  present  year  will  exceed  270,000 
tons,  and  yet  we  have  here  such  beds  of  coal  and  ore  as  are  found  in  no  other 
part  of  the  civilized  world. 


31 

gave  but  $15,000, 000,  and  the  treasury  became  literally  bankrupt — 
money  and  credit  having  wholly  disappeared.  The  protective  tarift 
of  1842  gave  $26,000,000  a  year,  and  we  found  then  no  difficulty  in 
raising  all  the  money  required  for  making  the  war  with  Mexico 
which  terminated  in  the  acquisition  of  California.  Under  the  rev- 
enue tariff  of  1857,  with  fifty  per  cent,  more  of  population  than  had 
existed  in  the  period  of  the  tariff  of  1842,  we  obtained  but  $47,000,- 
000,  notwithstanding  the  wonderful  addition  to  our  resources 
resulting  from  discovery  of  California  gold  and  Nevada  silver. 

Comparing  now  the  protective  tariff  of  1828  with  the  revenue 
one  of  1857,  we  find  that  notwithstanding  the  introduction  of  the 
railroad  and  the  discovery  of  California  treasures,  the  custom 
revenues  had  little  more  than  doubled,  while  the  population  had 
more  than  a  hundred  and  fifty  per  cent,  increased.  Comparing, 
again,  the  product  of  the  free  trade  tariff  of  1857  with  the  pro- 
tective one  of  the  last  three  years,  we  find  that,  although  the  popu- 
lation had  grown  but  25  per  cent.,  the  customs  revenue  had  more 
than  trebled.  Such  being  the  facts,  the  truth  of  the  following  pro- 
positions would  seem  to  be  now  entirely  established  : — 

First,  That  the  more  perfect  the  protection  to  domestic  industry 
and  the  larger  our  strides  toward  industrial  and  political  independ- 
ence, the  greater  is  the  power  of  our  people  to  contribute  to  the 
customs  revenue: 

Second,  That  the  more  domestic  commerce  is  left  unprotected, 
and  the  greater  our  industrial  dependence,  the  smaller  must  be  the 
customs  revenue,  and  the  greater  the  tendency  toward  bankruptcy 
of  the  people  and  the  States. 

Third,  That  the  true  road  to  freedom  for  man,  to  wealth,  power  and 
independence  for  the  nation,  lies  through  the  pursuit  of  a  policy 
which  looks  to  the  establishment  of  a  great  domestic  commerce  as 
the  basis  of  a  commerce  with  the  outside  world  far  greater  than 
any  we  yet  have  known. 

In  face  of  all  these  facts,  however,  we  are  told,  my  dear  sir, 
and  by  men  claiming  to  be  regarded  as  friends  of  freedom,  that 
"  from  protection  to  serfdom  there  is  but  a  single  step,  and  that 
but  one  other  is  required  to  carry  us  on  from  serfdom  to  slavery. 
These  three,"  as  we  are  further  assured,  "are  but  links  in  the  chain 
by  means  of  which  controlling  spirits  are  enabled  to  confiscate,  for 
their  own  proper  benefit,  the  time,  the  forces,  the  labor,  the  capital, 
the  liberty,  and  the  rights  of  the  great  masses  of  their  thus  subju- 
gated countrymen."  Such  being  the  views  that,  in  a  great  variety 
of  forms,  are  put  forth  daily  by  those  who  believe  that,  despite 
our  recent  unhappy  experience,  we  should  once  again  resume  that 
course  of  action  to  which  we  stand  indebted  for  all  the  losses  of 
property  and  life  inflicted  by  the  late  rebellion,  it  seems  to  me 
that  it  might  be  right  and  proper  for  you  to  ask  of  them  to  furnish 
answers  to  questions  like  the  following,  to  wit : — 

Why  is  it  that,  if  protection  be  really  adverse  to  freedom  and  to 
the  general  prosperity  of  our  people,  immigration  always  grows 
with  such  rapidity  when  protection  is  most  complete  ? 

Why  is  it  that,  if  British  free  trade  is  really  favorable  to  freedom, 


32 

men  who  previously  had  come  among  us  with  intent  to  stay,  have 
always  then  so  largely  re-emigrated  to  Europe? 

Why  it  has  been  that  in  the  last  few  years  hundreds  of  thousands 
of  Canadians  have  abandoned  their  free  trade  country,  and  have 
preferred  to  settle  in  these  benighted  and  protected  States  ? 

Why  it  is  that  of  the  emigrants  who  arrive  at  Quebec  and 
Montreal,  and  who  have  the  choice  between  free  trade  on  the  one 
hand  and  protection  on  the  other,  nearly  all  prefer  to  take  the 
latter,  selecting  homes  in  our  Western  States  ? 

Why  it  is  that  Nova  Scotia  and  New  Brunswick  are  almost  in  a 
state  of  rebellion,  because  of  their  feeling  of  the  absolute  necessity 
for  a  closer  connection  with  these  protected  States  ? 

Why  is  it  that  nearly  the  whole  population  of  Ireland  would  de- 
sire to  fly  from  British  freedom  of  trade  and  seek  for  homes  in 
this  now  partially  protected  country  ? 

Why  is  it  that  British  emigration  to  Australia  diminishes,  and 
that  to  us  increases,  almost  precisely  as  our  protective  policy  is 
made  more  and  more  complete  ?* 

Why  is  it  that  Australia,  after  a  most  severe  political  contest, 
has  just  now  elected  a  protectionist  parliament? 

Why  is  it  that  when  we  build  furnaces  and  open  mines  railroads 
are  always  profitable  to  their  owners,  and  capital  is  easily  obtained 
for  the  construction  of  new  lines  of  road  ? 

Why  is  it  that  when  mines  and  furnaces  are  abandoned,  railroad 
property  so  far  declines  that  it  becomes  impossible  to  obtain  the 
means  for  building  further  roads  ? 

Why  is  it  that  financial  crises,  resulting  in  the  ruin  of'trade,  are 
the  never  failing  accompaniments  of  the  British  free  trade  policy  ? 

Why  is  it  that  such  crises  never  occur  in  periods  of  protection  ? 

Why  is  it  that  the  deposits  in  our  saving  funds  increase  in  times  . 
of  protection,  and  diminish  in  those  of  British  free  trade  ? 

Why  is  it  that  sheriff's  sales  are  so  numerous  in  British  free 
trade  times,  and  so  few  in  number  in  those  of  protection  ? 

Why  is  it  the  revenue  tariff  periods  always  end  in  almost  total 
failure  of  public  revenues  and  almost  total  bankruptcy  of  the 
treasury  ? 

Why  is  it  that  protective  tariffs  are  so  favorable  to  increase  of 
public  revenue,  and  to  reduction  of  the  public  debt  ? 

Why  is  it  that  a  protective  tariff  now  produces  annually  nearly 
as  much  revenue  as  was  obtained  by  aid  of  a  merely  revenue  one 
in  the  whole  period  of  Mr.  Buchanan's  administration  ? 

Why  is  it  that  the  Republican  party — the  party  of  liberty,  of 

To  Australia.      To  the  United  States. 

*    1861  23,728  49,764 

1862  41,843f  58,706 

1863  53,054f  146,815 

1864  40.942J  147,042 

1865  37,2S2f  147,258 

1866  24,097  161,000 

1867  14,463  159,274 

f  In  these  years  emigration  was  unnaturally  stimulated  by  temporary  increase  of  demand 
for  Australian  wool,  consequent  on  failure  in  the  supply  of  American  cotton. 


33 

equal  rights,  of  intelligence,  find  of  sound  morals — is  so  generally 
favorable  to  the  protective  policy  ? 

Why  is  it  that  British  free  trade  doctrines  are  so  universally 
popular  among  men  who  believe  in  the  divine  origin  of  slavery — 
among  sympathizers  in  the  late  rebellion — among  foreign  agents — 
among  ignorant  foreigners — and  among  the  dangerous  classes 
throughout  the  Union  ? 

Why  is  it  that,  now  that  the  South  diversifies  its  industry  by 
raising  its  own  food,  it  obtains  as  much  for  2,000,000  bales  of  cotton 
as  before  it  had  received  for  4,000,000  ? 

Why  is  it  that  when  the  refining  of  our  oil,  and  fitting  it  for  con- 
sumption, gives  us  now  almost  our  only  real  free  trade,  the  same 
results  would  not  be  obtained,  and,  on  a  much  larger  scale,  by 
finishing  our  cotton  and  fitting  it  also  for  consumption  ? 

Why  is  it  that  Belgium,  the  most  prosperous  little  country  in 
Europe,  so  earnestly  adheres  to  protection  ? 

Why  is  it  that  Russia,  after  a  ten  years'  trial  of  British  free  trade, 
exhibits  herself  as  a  constant  borrower  throughout  western  Europe? 

Why  is  it  that  Sweden  is  now  in  a  state  of  so  great  suffering, 
after  nearly  a  decade  of  British  free  trade  ? 

Why  is  it  that  France,  in  making  her  last  treaty  with  England, 
established  a  tariff  more  intelligently  protective  than  our  own  ? 

Why  is  it  that  the  maker  of  that  treaty,  Mons.  Chevalier,  had 
been  led  to  tell  his  countrymen  that — 

"  Every  nation  owes  it  to  itself  to  seek  the  establishment  of  diversification 
in  the  pursuits  of  its  people,  as  Germany  and  England  have  already  done  in 
regard  to  cottons  and  woollens,  and  as  France  herself  has  done  in  reference  to 
so  many  and  so  widely-different  kinds  of  manufacturing  industry.  Within 
these  limits,"  as  he  further  says,  "  it  is  not  an  abuse  of  power  on  the  part  of 
the  Government ;  on  the  contrary,  it  is  the  accomplishment  of  a  positive  duty  so 
to  act  at  each  epoch  in  the  progress  of  a  nation,  as  to  favor  the  taking  possession 
of  all  the  branches  of  industry  whose  acquisition  is  authorized  by  the  nature  of 
things.  Governments  are,  in  effect,  the  personification  of  nations,  and  it  is  re- 
quired that  they  should  exercise  their  influence  in  the  direction  indicated  by  the 
general  interest,  properly  studied,  and  fully  appreciated.'1'1 

Why  is  it  that  Germany,  the  country  that  has  most  persist- 
ently carried  into  effect  the  policy  thus  recommended,  now  stands 
in  the  lead  of  Europe,  although  so  recently  a  mere  collection  of 
loose  fragments,  ready  to  be  moved  about  in  whatsoever  direction 
might  be  most  agreeable  to  France  or  England  at  one  moment, 
Russia  or  Austria  at  another  ? 

Why  is  it  that  British  policy,  that  policy  whose  imitation  is 
urged  upon  us  by  all  the  advocates  of  that  revenue  tariff  system 
which  has  so  invariably  resulted  in  destruction  of  the  revenue,  has 
so  entirely  crushed  out  of  existence  the  whole  race  of  those  small 
British  proprietors,  "  whose  touch"  according  to  Arthur  Young, 
"  turned  sand  into  gold  ?" 

Why  is  it  that  the  British  agricultural  laborer  has,  by  means  of 
that  policy,  been  reduced  to  a  condition  so  nearly  akin  to  slavery 
as  to  have  before  him  no  future  but  the  poor  house  ? 

Why  is  it  that  all  the  countries  of  the  earth  which  find  them- 
selves compelled  to  submit  to  the,  so  called,  free  trade  policy  now 


34 

urged  upon  the  world  by  British  traders,  are  this  day  in  little  better 
than  a  state  of  ruin  ? 

You  have  said,  my  dear  sir,  Let  us  have  peace  !  Peace  comes 
everywhere  with  general  demand  for  labor ;  with  good  wages ;  with 
large  demand  for  products  of  the  farm,  the  furnace,  the  factory, 
and  the  plantation ;  and  all  these  come  with  protection.  Let  us 
have  protection,  and  let  that  protection  be  so  definitively  adopted 
as  to  give  to  all  a  perfect  confidence  in  its  continued  maintenance, 
and  all  your  wishes  for  the  establishment  and  perpetuation  of 
peace  will  be  fully  realized. 

Greatly  hoping  that  such  may  prove  to  be  the  case,  I  remain, 
very  truly  and  respectfully,  yours,  HENRY  C.  CAREY. 

GEN.  U.  S.  GRANT. 
PHILADELPHIA,  Dec.  17,  1868. 


LETTER  SIXTH. 
DEAR  SIR  : — 

More  than  anything  else  whatsoever  the  country  needs  financial 
peace.  Shall  we  have  it  ?  On  the  answer  to  this  question  depends, 
as  I  think,  the  decision  as  to  whether  or  not  the  public  faith  is  to 
be  maintained — whether  or  not  the  Union  is  to  be  perpetuated. 

Forgetful  always,  even  of  the  events  of  j^esterday,  our  people  are 
particularly  so  in  reference  to  financial  questions,  and  therefore  is 
it  that  we  are  now  required  to  witness  so  many  absurd  attempts  at 
bringing  the  country  back,  so  far  as  regards  machinery  of  circula- 
tion, to  the  point  at  which  it  had  stood  at  the  opening  of  the  great 
rebellion.  Scheme  follows  scheme,  their  authors  wholly  overlook- 
ing the  facts,  that  the  long  period  from  1815  to  1860,  with  excep- 
tion alone  of  the  brief  and  happy  periods  of  protection  under  the 
tariffs  of  1828  and  1842,  had  presented  a  constant  series  of  finan- 
cial crises,  bringing  ruin  everywhere  to  unfortunate  debtors,  while 
enabling  wealthy  creditors  largely  to  augment  their  already  enor- 
mous fortunes ;  that  in  that  period  there  had  been  no  less  than  four 
general  bank  suspensions;  that  throughout  the  Centre  and  the 
West,  the  South  and  the  Southwest,  the  average  rate  of  interest  had 
been  higher  than  in  any  other  country  of  the  world,  claiming  to  rank 
as  civilized ;  that  the  money  value  of  property  everywhere  had  been 
almost  wholly  dependent  on  the  condition  of  the  English  money 
market ;  that  railroad  proprietors,  manufacturers,  miners,  and  fur- 
nace men  had,  on  repeated  occasions,  seen  their  property  almost 
wholly  swept  away  ;  that  in  each  successive  revenue  tariff  period  a 
large  portion  of  the  lands  and  houses  of  the  country  had  changed 
owners  under  the  sheriff's  hammer;  and,  finally,  that  rebellion 
was  but  the  natural  consequence  of  a  system  by  means  of  which 
the  Bank  of  England  had  been  enabled,  by  a  single  turn  of  the 
screw,  to  withdraw  from  the  country  nearly  the  whole  of  the  little 
specie  basis  on  which  our  circulation  has  rested,  thereby  paralyzing 
the  societary  movement,  and  depriving  both  government  and  people 


35 

of  the  means  required  for  their  support.  What  was  the  real  state 
of  things  at  the  opening  of  the  rebellion  will  now  be  shown,  as 
follows : — 

Had  it  been  possible  on  the  4th  of  March,  1861,  to  take  a  bird's- 
eye  view  of  the  whole  Union,  the  phenomena  presenting  themselves 
for  examination  would  have  been  as  follows : — 

Millions  of  men  and  women  would  have  been  seen  who  were 
wholly  or  partially  unemployed,  because  of  inability  to  find  persons 
able  and  willing  to  pay  for  service. 

Hundreds  of  thousands  of  workmen,  farmers,  and  shopkeepers 
would  have  been  seen  holding  articles  of  various  kinds  for  which 
no  purchasers  could  be  found. 

Tens  of  thousands  of  country  traders  would  have  been  seen  por- 
ing over  their  books  seeking,  but  vainly  seeking,  to  discover  in  what 
direction  they  might  look  for  obtaining  the  means  with  which  to 
discharge  their  city  debts. 

•Thousands  of  city  traders  would  have  been  seen  endeavoring  to 
discover  how  they  might  obtain  the  means  with  which  to  pay  their 
notes. 

Thousands  of  mills,  factories,  furnaces,  and  workshops  large  and 
small,  would  have  been  seen  standing  idle  while  surrounded  by  per- 
sons who  desired  to  be  employed ;  and 

Tens  of  thousands  of  bank,  factory,  and  railroad  proprietors  would 
have  been  seen  despairing  of  obtaining  dividends  by  means  of  which 
they  might  be  enabled  to  go  to  market. 

High  above  all  these  would  have  been  seen  a  National  Treasury 
wholly  empty,  and  to  all  appearance  little  likely  ever  again  to  be 
filled. 

Why  was  all  this  ?  The  laborer  needing  food,  and  the  farmer 
clothing,  why  did  they  not  exchange?  Because  of  the  absence  of 
power  on  the  part  of  the  former  to  give  to  the  latter  anything  with 
which  he  could  purchase  either  hats  or  coats. 

The  village  shopkeeper  desired  to  pay  his  city  debts.  Why  did 
he  not  ?  Because  the  neighboring  mill  was  standing  idle,  while  men 
and  women  indebted  to  him  were  wholly  unemployed. 

The  city  trader  could  not  meet  his  notes,  because  his  village  cor- 
respondents could  not  comply  with  their  engagements.  The  doctor 
could  not  collect  his  bills.  The  landlord  could  not  collect  his  rents  ; 
and  all,  from  laborer  to  landlord,  found  themselves  compelled  to  re- 
frain from  the  purchase  of  those  commodities  to  whose  consumption 
the  National  Treasury  had  been  used  to  look  for  the  supplies  upon 
which  it  thus  far  had  depended. 

With  all,  the  difficulty  resulted  from  the  one  great  fact  alread}^ 
indicated  in  regard  to  the  laborer.  If  he  could  have  found  any  one 
willing  to  give  him  something  that  the  farmer  would  accept  from 
him  in  exchange  for  food — that  the  farmer  could  then  pass  to  his 
neighbor  shopkeeper  in  exchange  for  cloth — that  that  neighbor 
could  then  pass  to  the  city  trader  in  satisfaction  of  his  debt — and 
that  this  latter  could  then  pass  to  the  bank,  to  his  counsel,  his  phy- 
sician, or  his  landlord — the  socictary  circulation  would  at  once  have 
been  re-established,  and  the  public  health  restored. 

That  one  thing,  however,  was  scarcely  anywhere  to  be  found.  Its 


36 

generic  name  was  money,  but  the  various  species  were  known  as 
gold,  silver,  copper,  and  circulating  notes.  Some  few  persons  pos- 
sessed them  in  larger  or  smaller  quantities  ;  but,  the  total  amount 
being  very  small  when  compared  with  that  which  was  required,  their 
owners  would  not  part  with  the  use  of  them  except  on  terms  so 
onerous  as  to  be  ruinous  to  the  borrowers.  As  a  consequence  of 
this,  the  city  trader  paid  ten,  twelve,  and  fifteen  per  cent,  per  an- 
num for  the  use  of  what  he  needed,  charging  twice  that  to  the  vil- 
lage shopkeeper,  in  the  price  of  his  goods.  The  latter,  of  course, 
found  it  necessary  to  do  the  same  by  his  neighbors,  charging  nearly 
cent,  per  cent. ;  and  thus  was  the  whole  burthen  resulting  from  de- 
ficiency in  the  supply  of  a  medium  of  exchange  thrown  upon  the 
class  which  least  could  bear  it,  the  working  people  of  the  country — 
farmers,  mechanics,  and  laborers.  As  a  consequence  of  this  they 
shrank  in  their  proportions  as  the  societary  circulation  became  more 
and  more  impeded,  while  with  those  who  controlled  the  money 
supply  the  effect  exhibited  itself  in  the  erection  of  those  great 
palaces  which  now  stand  almost  side  by  side  with  tenement  houses, 
whose  occupants,  men,  women,  and  children,  count  by  hundreds. 
The  rich  thus  grew  richer  as  the  poor  grew  poorer. 

Why  was  all  this  ?  Why  did  they  not  use  the  gold  of  which 
California  had  already  sent  us  so  many  hundreds  of  millions?  Be- 
cause we  had  most  carefully  followed  in  the  train  of  British  free 
trade  teachers  who  had  assured  our  people  that  the  safe,  true,  and 
certain  road  toward  wealth  and  power  was  to  be  found  in  the  di- 
rection of  sending  wheat,  flour,  corn,  pork,  and  wool  to  England 
in  their  rudest  form,  and  then  buying  them  back  again,  at  quadruple 
prices,  paying  the  difference  in  the  products  of  California!!  mines ! 
Because  we  had  in  this  manner,  for  a  long  period  of  years,  been 
selling  whole  skins  for  sixpence  and  buying  back  tails  for  a  shill- 
ing !*  Because  we  had  thus  compelled  our  people  to  remain  idle 
while  consuming  food  and  clothing,  the  gold  meanwhile  being  sent 
to  purchase  other  food  and  clothing  for  the  workmen  of  London 
and  Paris,  Lyons,  Manchester,  and  Birmingham ! 

Why,  however,  when  circulating  notes  could  so  easily  be  made, 
did  not  the  banks  supply  them,  when  all  around  them  would  so 
gladly  have  allowed  interest  for  their  use  ?  Because  those  notes 
were  redeemable  in  a  commodity  of  which,  although  California 
gave  us  much,  we  could  no  longer  retain  even  the  slightest  portion, 
the  quantity  required  abroad  for  payment  of  heavy  interest,  and 
for  purchase  of  foreign  food  in  the  forms  of  cloth  and  iron, 
having  now  become  fully  equal  to  the  annual  supply,  and  being  at 
times  even  in  excess  of  it.  That  demand,  too,  was  liable  at  any 
moment  to  be  increased  by  the  sale  in  our  market  of  certificates  of 
debt  then  held  abroad  to  the  extent  of  hundreds  of  millions,  the 
proceeds  being  claimed  in  gold,  and  thus  causing  ruin  to  the  banks. 
To  be  out  of  debt  is  to  be  out  of  danger,  but  to  be  in  debt  abroad 
to  the  extent  of  hundreds  of  millions  is  to  be  always  in  danger  of 
both  public  and  private  bankruptcy.  The  control  of  our  whole 

*  In  the  days  of  the  Stuarts  England  exported  raw  materials  and  imported 
finished  products,  and  the  people  of  the  Rhine  countries  ridiculed  them  as  fools 
who  sold  whole  skins  for  sixpences  and  bought  back  the  tails  for  shillings. 


37 

domestic  commerce  was  therefore  entirely  in  the  hands  of  foreigners 
who  were  from  hour  to  hour  becoming  richer  by  means  of  compelling 
us  to  remain  so  dependent  upon  them  that  they  could  always  fix  the 
prices  at  ichich  they  would  buy  the  skins,  and  those  at  which  they 
vniild  be  ir  tiling  to  sell  the  tails.  As  a  necessary  consequence  of 
this,  the  nation  was  not  only  paralyzed,  but  in  danger  of  almost 
immediate  death. 

Such  having  been  the  state  of  things  on  the  day  of  Mr.  Lincoln's 
inauguration,  let  us  now  look  at  the  remedy  that  was  then  required. 
Let  us,  for  a  moment,  suppose  the  existence  of  an  individual  with 
wealth  so  great  that  all  who  knew  him  might  have  entire  confidence 
in  the  performance  of  what  he  promised.  Let  us  then  suppose 
that  he  should  have  said  to  the  laborers  of  the  country,  "  Go  into 
the  mills,  and  I  will  see  that  your  wages  are  paid  ;"  to  the  millers, 
"  Employ  these  people,  and  I  will  see  that  your  cloth  is  sold  ;"  to 
the  farmers,  "  Give  your  food  to  the  laborer  and  your  wool  to  the 
millers,  and  I  will  see  that  your  bills  are  at  once  discharged;"  to 
the  shopkeepers,  "  Give  your  coffee  and  your  sugar  to  the  farmer, 
and  I  will  see  that  payment  shall  forthwith  be  made ;"  to  the 
city  traders,  "  Fill  the  orders  of  the  village  shopkeeper,  and  send 
your  bills  to  me  for  payment ;"  to  the  landlords,  "  Lease  your 
houses  and  look  to  me  for  the  rents ;"  to  all,  "  I  have  opened  a 
clearing  house  for  the  whole  country,  and  have  done  so  with  a  view 
to  enable  every  man  to  find  on  the  instant  a  cash  demand  for  his 
labor  and  its  products,  and  my  whole  fortune  has  been  pledged  for 
the  performance  of  my  engagements;"  and  then  let  us  examine 
into  the  effects.  At  once  the  societary  circulation  would  have  been 
restored.  Labor  would  have  come  into  demand,  thus  doubling  at 
once  the  productive  power  of  the  country.  Food  would  have  been 
demanded,  and  the  farmer  would  have  been  enabled  to  improve  his 
machinery  of  cultivation.  Cloth  would  have  been  sold,  and  the 
spinner  would  have  added  to  the  number  of  his  spindles.  Coal  and 
iron  would  have  found  increased  demand,  and  mines  and  furnaces 
would  have  grown  in  numbers  and  in  size.  Houses  becoming  more 
productive,  new  ones  would  have  been  built.  The  paralysis  would 
have  passed  away,  life,  activity,  and  energy  having  taken  its  place, 
all  these  wonderful  effects  having  resulted  from  the  simple  pledge 
of  one  sufficient  man  that  he  would  see  the  contracts  carried  out. 
He  had  pledged  his  credit  and  nothing  more. 

What  is  here  supposed  is  almost  precisely  what  was  done  by  Mr. 
Lincoln  and  his  administration,  the  only  difference  having  been, 
that  while  in  the  one  case  the  farmers  and  laborers  had  been  re- 
quired to  report  themselves  to  the  single  individual,  the  Government 
had,  in  the  other,  by  actual  purchase  of  labor  and  its  products, 
and  the  grant  of  its  pledges  in  a  variety  of  shapes  and  forms,  en- 
abled each  and  every  man  in  the  country  to  arrange  his  business  in 
the  manner  that  to  himself  had  seemed  most  advantageous.  To 
the  laborer  it  had  said,  We  need  }^our  services,  and  in  return  will 
give  you  that  which  will  enable  your  family  to  purchase  food  and 
clothing.  To  the  farmer  it  had  said,  W7e  need  food,  and  will  give 
you  that  by  means  of  which  you  can  pay  the  shopkeeper.  To  the 
manufacturer  it  had  said,  We  need  cloth,  and  will  give  you  that 


38 

which  will  enable  you  to  settle  with  the  workman  and  the  farmer. 
To  the  naval  constructor  it  had  said,  We  need  your  ships,  and  will 
give  you  that  which  will  enable  you  to  purchase  timber,  iron,  and 
engines.  In  this  manner  it  was  that  domestic  commerce  has  been 
stimulated  into  life,  the  result  exhibiting  itself  in  the  facts,  that 
while  we  increased  to  an  extent  never  known  before,  the  number  of 
our  houses  and  ships,  our  mills,  mines,  and  furnaces,  our  supplies 
of  food,  cloth,  and  iron ;  and  while  we  diversified  our  industry 
lo  an  extent  that  was  absolutely  marvellous ;  we  were  enabled  to 
tend  or  pay  to  the  Government  thousands  of  millions  of  dollars,- 
where  before,  under  the  system  which  made  us  wholly  dependent 
on  the  mercy  of  the  wealthy  capitalists  of  England,  it  had 
been  found  difficult  to  furnish  even  tens  of  millions.  The  whole 
history  of  the  world  presents  no  case  of  a  financial  success  so 
perfect. 

In  the  physical  body  health  is  always  the  accompaniment  of  rapid 
circulation,  disease  that  of  a  languid  one.  Now,- for  the  first  time 
since  the  settlement  of  these  colonies,  had  our  people  had  experience 
of  the  first.  Every  man  who  had  desired  to  work,  had  found  a  pur- 
chaser for  his  labor.  Every  man  who  had  had  labor's  products  to 
sell,  had  found  a  ready  market.  Every  man  who  had  had  a  house 
to  rent,  had  found  a  tenant.  And  why?  Because  the  government 
had  done  for  the  whole  nation  what  companies  do  for  localities  when 
they  give  them  railroads  in  place  of  wagon  roads.  It  had  so  facili- 
tated exchange  between  consumers  and  producers,  that  both  parties 
had  been  enabled  to  pay  on  the  instant  for  all  they  had  had  need  to 
purchase. 

Important,  however,  as  is  all  this,  it  is  but  a  part  of  the  great 
work  that  had  been  accomplished.  With  every  stage  of  progress 
there  had  been  a  diminution  in  the  general  rate  of  interest,  with 
constant  tendency  towards  equality  in  the  rate  paid  by  farmers 
of  the  east  and  the  west,  by  the  owner  of  the  little  workshop  and 
by  him  who  owned  the  gigantic  mill.  For  the  first  time  in  our  his- 
tory the  real  workingmen — the  laborer,  the  mechanic,  and  the  little 
village  shopkeeper — had  been  enabled  to  command  the  use  of  the 
machinery  of  circulation  at  a  moderate  rate  of  interest.  For  the 
first  time  had  nearly  all  been  enabled  to  make  their  purchases  cash 
in  hand,  and  to  select  from  among  all  the  dealers  those  who  would 
supply  them  cheapest.  For  the  first  time  had  this  class  known 
anything  approaching  to  real  independence;  and  therefore  had  it 
been  that,  notwithstanding  the  demands  of  the  war,  capital  had  so 
rapidly  accumulated.  The  gain  to  the  working  people  of  the  Union 
thus  effected,  had  been  more  than  the  whole  money  cost  of  the  war, 
and  therefore  they  had  cheerfully  paid  their  taxes,  while  so  many  had 
been  enabled  to  purchase  the  securities  offered  by  the  government. 

Further  than  all  this,  we  had  for  the  first  time  acquired  something 
approaching  to  a  national  independence.  In  all  time  past,  the  price 
of  money  having  been  wholly  dependent  on  the  price  in  England, 
the  most  important  intelligence  from  beyond  the  Atlantic  was  that 
which  was  to  be  found  in  the  price  of  British  securities  on  the  Ex- 
change of  London.  With  each  arrival,  therefore,  our  railroad  shares 
went  up  or  down  because  the  Bank  of  England  had  seen  fit  to  pur- 


39 

chase  a  few  Exchequer  bills,  or  had  found  it  necessary  to  part  with 
some  of  those  it  previously  had  held.  In  all  this  there  had  been  a 
change  so  complete  that  the  price  of  British  Consols  had  ceased 
entirely  to  enter  into  American  calculations.  The  stride,  in  this 
ct  alone,  that  had  been  made  in  the  direction  of  independence, 
was  worth  to  the  country  more  than  the  whole  money  cost  of  the 
great  war  in  which  we  are  now  engaged. 

Throughout  the  war  the  government  allied  itself  with  the  great 
body  of  the  people,  those  who  had  money  to  borrow,  interest  to  pay, 
labor  and  labors1  products  to  sell,  comprising  nineteen-twentieths  of 
our  total  population  ;  and  hence  it  was  that  the  war  resulted  in  suc- 
f'ss  so  entirely  complete.  Since  then  there  has  been  a  constant 
effort  at  separating  the  government  from  that  great  class,  and 
bringing  it  into  close  alliance  with  that  very  trivial  one,  so  far  as 
numbers  go,  which  profits  by  high  rates  of  interest  and  low  prices 
of  labor  and  labors'  products;  and  hence  it  is,  that  there  has  re- 
cently been  so  much  danger  of  seeing  control  of  the  country  pass 
into  the  hands  of  those  who,  North  and  South,  had  participated  in 
the  rebellion.  To  that  end  the  greenback,  everywhere  claimed  as 
the  people's  money,  has  by  those  in  high  places  been  denounced, 
small  as  is  the  quantity,  when  compared  with  the  real  need  for 
it.  To  that  end  there  has  been  an  un remitted  effort  at  leading 
farmers,  laborers,  and  mechanics,  to  the  belief  that  it  had  been 
a  "forced  loan,"  by  means  of  which  they  had  been  daily  robbed  ; 
that  it  had  been,  and  still  remains,  "a  dishonored  and  dishonorable 
currency,"  by  the  use  of  which  they  themselves  were  "  becoming 
demoralized;"  that  as  a  consequence  of  its  use  they  were  "in  danger 
of  losing  that  sense  of  honor  which  is  necessary  for  the  well-being  of 
society ;"  that  to  its  continued  use  they  had  been  indebted  since  the 
war  for  "instability  of  prices,  unsteadiness  in  trade,"  and  a  variety 
of  other  ills,  whose  general  effect  is,  as  we  are  assured  by  no  less  an 
authority  than  that  of  our  Finance  Minister,  that  of  "filling  the 
coffers  of  the  rich,"  while  making  the  country  absolutely  "  intoler- 
able to  persons  of  limited  incomes." 

The  person  to  whom  we  are  just  now  indebted  for  this  last  and  worst 
description  of  the  evils  under  which  we  labor,  may,  my  dear  sir, 
certainly  be  classed  among  those  who  most  entirely  discharge  from 
their  memories  all  recollection  of  yesterday's  events.  Had  it  been 
otherwise  with  him  he  would  have  seen  that,  with  exception  of  the 
years  of  the  protective  tariffs  of  1828  and  1842,  the  whole  of  the 
period  from  1815  to  1860  had  exhibited  a  succession  of  changes 
infinitely  greater  and  more  injurious  to  both  people  and  government 
than  any  that  had  been  known  since  the  greenback  had  been  issued; 
since  the  nation  first  assumed  performance  of  the  duty  of  fur- 
nishing a  basis  for  our  monetary  transactions  not  liable  to  be  with- 
drawn at  any  and  every  moment  of  change  in  the  policy  of  the  Bank 
of  England,  as  had  been  the  case  in  all  those  periods  at  which  we 
had  pretended  to  maintain  the  use  of  the  precious  metals,  while 
pursuing  a  revenue  tariff  policy  which  compelled  an  export  of  the 
whole  gold  produce  of  California. 

Less  forgetful  than  the  Secretary,  those  who  have  labor  to  sell 
and  money  to  buy,  the  vast  majority  of  our  ueople,  cling  to  the  ex- 


40 

isting  state  of  things,  and  anxiously  desire  to  witness  a  restoration 
of  that  financial  peace  which  had  prevailed  at  the  moment  when  the 
former,  in  his  memorable  Fort  Wayne  speech,  fulminated  his  de- 
claration of  financial  war.  From  that  hour  he  has  been  in  close 
alliance  with  the  money  lending  class,  receivers  of  interest,  and 
livers  on  incomes,  with  them  asserting  that  circulating  notes  were 
greatly  in  excess  of  the  public  needs ;  that  the  national  honor  de- 
manded a  substitution  of  gold  for  notes;  and  that  suppression  of 
the  latter  would  be  followed  by  such  increased  supplies  of  the  former 
as  would  at  once  fill  the  vacuum  thus  created;  thereby  doing 
all  in  his  power  toward  destroying  that  faith  in  the  future  to 
which  we  had  been  indebted  for  success  in  war,  and  to  which  we 
must  be  indebted  for  power  to  resume  should  resumption  ever  again 
be  brought  about. 

How  absurd  are  such  assertions,  and  how  little  they  are  calcu- 
lated to  bear  examination,  will,  as  I  think,  become  obvious,  my  dear 
sir,  when  you  have  reflected  on  the  following  facts : — 

With  a  population  scarcely  larger  than  our  own,  grouped  toge- 
ther on  a  surface  less  than  that  of  half  a  dozen  of  our  States  and 
therefore  having  far  less  need  than  ourselves  of  any  material  medium 
of  exchange,  France  has  a  circulating  medium  one-half  greater  than 
is  allowed  to  us. 

With  a  still  more  compressed  population,  and  one  far  more  ac- 
customed to  effecting  exchanges  without  the  use  of  any  species  of 
money  whatsoever,  Great  Britain  and  Ireland  use  more  than  twenty 
dollars  per  head. 

With  less  than  forty  millions  of  people,  scattered  over  almost  a 
continent,  and  therefore  standing  thrice  as  much  in  need  of  some 
material  medium  of  circulation,  we  are  allowed  far  less  than  is 
given  in  either  France  or  Britain.  When,  however,  we  look  to  those 
portions  in  which  population  is  dense,  and  money  by  comparison 
little  needed,  we  find  them  using  more  than  either  France  or  Eng- 
land, the  actual  circulation  of  New  England  being  more  than  thirty 
dollars  per  head. 

Looking  next  South  and  West,  we  find  in  many  of  the  States  and 
territories  hardly  even  a  single  one,  and  with  scarcely  the  smallest 
chance  that  more  than  one  will  ever  be  allowed  them.  To  assert, 
under  such  circumstances,  that  there  is  any  excess  of  circulation,  is 
so  utterly  absurd  as  to  make  it  almost  doubtful  if  the  gentleman 
who  writes  treasury  and  currency  reports,  and  those  others  who 
make  resumption  speeches,  can  really  believe  the  strange  assertions 
they  have  been  used  to  make.  To  seek,  by  means  of  action  in  the 
direction  such  men  now  indicate,  a  resumption  of  specie  payments, 
must  result  in  failure  so  complete  as  to  postpone  any  real  resump- 
tion for  half  a  century  to  come. 

What  the  country  really  needs  is  an  increase,  and  not  a  decrease, 
in  the  machinery  of  circulation.  That,  however,  as  we  are  assured, 
will  readily  be  obtained  if  the  circulating  notes  can  only  be  sup- 
pressed. Create  a  need  for  the  precious  metals,  and  the}^  will  be 
sure  to  come.  Why,  however,  is  it,  that  it  is  precisely  where  circu- 
latory notes  most  abound,  in  New  England,  Old  England,  France, 
and  Belgium,  that  gold  and  silver  are  most  attracted  ?  Why  is  it, 


41 

that  in  the  almost  total  absence  of  circulating  notes,  the  precious 
metals  have  so  entirely  disappeared  from  Georgia  and  Alabama, 
North  and  South  Carolina  ?  Why  is  it,  pending  the  existence  of 
the  state  of  affairs  here  below  described,  the  precious  metals  fly 
from  Utah  and  its  immediate  neighborhood  ? 

"  Yon  have  tight  money  markets  sometimes  in  the  East.  I  have  read  of  how 
semi-savage  nations  'barter.'  I  saw  it  cited,  as  a  curious  fact,  in  the  news- 
papers, that  in  Georgia  eggs  are  used  as  small  change ;  but  in  Utah  I  see  around 
me  a  people,  a  prosperous  people,  doing  the  business  of  life  almost  without  any 
money  at  all.  In  Salt  Lake  City  itself,  right  in  the  line  of  travel,  there  is  some 
money ;  but  in  the  country  settlements,  which  radiate  thence  into  every  valley 
and  by  every  watercourse  for  a  hundred  miles,  it  is  literally  true  that  they  have 
no  circulating  medium.  Wheat  is  the  usual  legal  tender  of  the  country. 
Horses,  harness,  vehicles,  cattle,  and  hay,  are  cash ;  eggs,  butter,  pistols,  knives, 
stockings,  and  whisky,  are  change  ;  pumpkins,  potatoes,  sorghum,  molasses,  and 
calves,  are  '  shinplasters,'  which  are  taken  at  a  discount,  and  with  which  the 
saints  delight  to  pay  their  debts  (if  it  is  ever  a  delight  to  pay  debts).  Business 
in  this  community,  with  this  currency,  is  a  very  curious  and  amusing  pastime. 
A  peddler,  for  instance,  could  take  out  his  goods  in  a  carpet-bag,  but  would  need 
a  '  bull'  train  to  freight  back  his  money.  I  knew  a  man  who  refused  an  offer 
to  work  in  the  country  at  fifty  dollars  a  month  because  he  would  need  a  '  forty- 
hundred  wagon  and  four  yoke  of  oxen'  to  haul  his  week's  wages  to  the  whisky- 
shop,  theatre,  &c. ,  on  Saturday  evening.  When  a  man  once  lays  out  his  money  in 
any  kind  of  property,  it  is  next  to  impossible  to  reconvert  it  into  money.  There 
is  many  a  man  here,  who,  when  he  first  came  into  the  valley,  had  no  intention 
of  remaining  but  a  short  time,  but  soon  got  so  involved  that  he  could  never  get 
away  without  making  heavy  pecuniary  sacrifices.  Property  is  a  Proteus,  which 
you  must  continue  to  grip  firmly,  notwithstanding  his  slippery  changes,  until 
you  have  him  in  his  true  shape.  Now  you  have  him  as  a  fine  horse  and  sad- 
dle ;  presto,  he  is  only  sixty  gallons  of  sorghum  molasses  ;  now  he  changes  into 
two  cows  and  a  calf,  and  before  you  have  time  to  think  he  is  transformed  into 
fifteen  cords  of  wood  up  in  the  mountain  canon ;  next  he  becomes  a  yoke  of 
oxen  ;  then  a  '  shutler'  wagon ;  ha  !  is  he  about  to  slip  from  you  at  last  in  the 
form  of  bad  debts?" 

The  following  passage  from  a  letter  just  received  from  Iowa, 
shows  how  completely  the  financial  policy  of  our  Financial  Minis- 
ter tends  to  place  the  many  who  have  to  borrow  at  the  mercy  of 
the  few  who  are  able  to  lend  : — 

"  When  the  banks  have  money  to  loan  it  can  be  borrowed  for  10  per  cent, 
interest  per  annum  ;  but  sometimes,  and  very  often,  they  are  short  and  refuse 
to  loan  except  to  their  daily  customers.  Then  the  occasional  borrower  is 
thrown  upon  the  tender  mercies  of  money  men,  many  of  whom  indeed  are 
bankers,  and  is  forced  to  pay  30  and  sometimes  40  per  cent.  This  is,  of 
course,  done  in  an  underhand  way,  so  that  the  law  cannot  reach  the  extor- 
tioner, but  it  could  not  be  done  at  all  if  we  had  circulation  enough." 

The  picture  here  presented  is  that  of  the  whole  country  south  and 
west  of  Pennsylvania,  yet  are  we  daily  treated  with  prescriptions 
for  financial  cure  based  upon  the  idea  of  making  more  and  more 
scarce  that  machinery  of  circulation  for  use  of  which  poor  men  are 
already  paying  30  or  40  per  cent,  per  annum ! 

Careful  study  of  the  facts  here  given  might,  perhaps,  satisfy  our 
Finance  Minister,  that  the  more  thoroughly  the  channels  of  circu- 
lation are  supplied  with  the  cheaper  commodity,  as  is  now  the  case 
in  all  Xew  England,  the  greater  is  the  power  to  purchase  the  pre- 
cious metals  and  the  less  the  need  for  them.  What  is  now  most 
required  is  an  increase  of  the  former  and  a  diminution  of  the  latter, 


42 

every  step  in  that  direction  tending  towards  reduction   of  that 
premium  on  goM,  of  which  complaint  is  made. 

That  such  reduction  may  be  brought  about,  there  must  be  a 
restoration  of  that  confidence  which  the  Secretary  has  so  studiously 
labored  to  destroy.  Such  restoration  may  be  looked  for  when  our 
reformers  shall  have  determined  to  study  a  very  little  of  that  past, 
which  they  have  so  evidently  forgotten.  Studying  it,  they  will  be 
led  to  see  that,  with  the  single  exception  of  the  protective  periods 
above  referred  to,  at  no  time  in  our  history  has  the  price  of  gold, 
as  measured  in  corn  or  cotton,  cloth  or  houses,  farms  or  furnaces, 
remained  so  steady  as  in  the  four  3rears  through  which  we  have  just 
now  passed. 

Within  those  years  we  have  closed  a  war  which  was  costing  three 
millions  a  day,  and  have  entered  upon  a  state  of  peace  the  cost 
of  which  is  less  than  half  a  million ;  and  yet,  sudden  as  was  the 
change,  the  bankruptcies  and  sheriff's  sales  have  not- been  a  fifth  as 
great  in  number  as  those  produced  in  nominally  specie-paying,  and 
really  British  free-trade,  times,  in  a  single  year.  Never  in  the  whole 
history  of  the  world  has  so  great  a  change  been  so  little  felt ;  and 
the  reason  why  it  has  been  so  is,  that  the  substratum  of  our  whole 
monetary  system  consisted  of  a  commodity  for  which  there  was  no 
demand  in  foreign  markets. 

That  we  should  at  all  times  hold  ID  mind  that  resumption  must 
eventually  be  reached,  is  not  at  all  to  be  questioned.  That  it  may 
be  so  reached  as  to  give  us  increased  prosperity,  it  must  be  sought 
in  a  direction  very  different  from  any  yet  indicated  by  our  many 
monetary  reformers,  whether  editors,  senators,  or  finance  ministers. 

What  that  direction  is  I  propose  to  state  in  a  future  letter,  and 
meanwhile  remain,  with  great  regard  and  respect,  yours  truly, 

HENRY  C.  CAREY. 

Philadelphia,  December  21, 1868. 


LETTER  SEVENTH. 

DEAR  SIR  : — 

The  cheapest,  most  effective,  and  most  important  of  all  the  ma- 
chinery by  means  of  which  property  is  enabled  to  pass  from  hand 
to  hand,  and  thus  to  become  current,  is  found  in  the  credit  and  the 
check  by  whose  aid  thousands  of  millions  pass  in  Wall  Street  with 
less  use  of  any  material  medium  of  circulation  than  among  the 
Rocky  Mountains  would  be  required  for  arrangement  of  transac- 
tions counting  by  hundreds,  or  by  thousands. 

Next  to  them  comes  the  circulating  note,  the  most  generally  useful, 
the  most  harmless,  and  the  most  calumniated  of  all  the  labor  saving 
machinery  ever  invented  by  man. 

Last  of  all — the  most  cumbrous,  most  expensive,  and  least  effect- 
ive of  all  the  machinery  of  circulation  in  use  among  people  claim- 
ing to  be  civilized — come  the  precious  metals  themselves,  and  for 


43 

that  reason,  probably,  the  most  admired  by  such  financiers  as  our 
actual  President  and  his  Finance  Minister,  the  two  uniting  in 
denouncing  the  circulating  note  as  the  inferior  currency  by  means 
of  which  the  superior  one,  consisting  of  the  metals  themselves,  is, 
as  they  assure  us,  driven  out  of  use. 

When,  however,  the  honorable  Secretary  comes  to  compare  the 
working  of  the  credit  and  the  note,  he  assures  us  that  so  far  is  the  in- 
ferior note  from  expelling  the  superior  credit,  that  it  is  this  latter 
which  is  continually  thrusting  the  former  out  of  use,  in  the  manner 
that  here  is  shown  : — 

"  In  all  the  cities  and  towns  throughout  the  country  checks  upon  credits  in 
banks  and  bills  of  exchange  have  largely  taken  the  place  of  bank  notes.  Not 
a  fiftieth  part  of  the  business  of  the  large  cities  is  transacted  by  the  actual  use 
of  money,  and  what  is  true  in  regard  to  the  business  of  the  chief  of  cities  is 
measurably  true  in  regard  to  that  of  towns  and  villages  throughout  the  country. 
Everywhere  bank  credits  and  bills  of  exchange  perform  the  office  of  currency 
tt  a  much  greater  extent  than  in  former  years.  Except  in  dealings  with  the 
government,  for  retail  trade,  for  the  payment  of  labor  and  taxes,  for  travelling 
expenses,  the  purchase  of  products  at  first  hand,  and  for  the  bankers'  reserve, 
money  is  hardly  a  necessity.  The  increased  use  of  bank  checks  and  bills  of 
exchange  counterbalances  the  increased  demand  for  money  resulting  from  the 
curtailment  of  mercantile  credits." — Report  of  the  Secretary  of  the  Treasury  on 
the  State  of  the  Finances  for  the  year  1867. 

This  is  all  perfectly  true.  The  superior  currency  of  the  check 
and  the  credit  tends  to  lessen  demand  for  the  inferior  note,  just  as 
the  locomotive  lessens  demand  for  the  wagon — the  note  in  its  turn 
displacing  the  precious  metals  just  as  the  wagon  displaces  the 
mule  and  the  pack-saddle.  Any  attempt,  therefore,  at  driving  the 
note  from  use,  with  a  view  to  compel  increased  use  of  the  metals,  is 
as  much  in  opposition  to  the  progress  of  civilization  as  would  be 
a  law  forbidding  use  of  the  telegraph  with  a  view  to  compel  in- 
creased use  of  the  facilities  of  intercourse  furnished  by  the  post 
office  and  the  railroad  train. 

The  great  labor-saving  machine  is  the  credit.  The  next  is  the  cir- 
culating note.  Last  come  the  metals,  by  means  of  which  men  are 
enabled  to  pass  from  the  slow  and  costly  operation  of  barter  to  the 
more  rapid  one  of  purchase  and  sale.  Why  then  do  not  all  men 
prefer  the  cheap  credit  even  to  the  slightly  expensive  note  ?  For 
the  reason  that  credit  itself  can  have  no  existence  among  a  poor 
and  widely  scattered  population.  It  abounds  in  England  and  New 
England,  but  has  no  existence  in  the  regions  of  the  Rocky  Mount- 
ains and  Rio  Grande.  Why,  then,  do  these  latter  not  even  adopt 
the  note  ?  For  the  reason  that  they  are  not  yet  so  far  advanced  in 
civilization  as  to  have  among  themselves  either  individuals  or  cor- 
porations capable  of  making  notes  such  as  would  readily  be  received 
in  exchange  for  property  of  any  description  whatsoever.  The  need 
for  such  notes,  proportioned  to  the  exchanges  required  to  be  made,  is 
a  thousand  times  greater  than  it  is  in  Wall  Street ;  and  it  exists  every- 
where in  the  precise  ratio  of  the  absence  of  the  check,  the  draft, 
the  clearing  house,  and  all  other  of  the  various  contrivances  for 
dispensing  with  the  services  of  either  the  precious  metals  or  the 
circulating  note. 


44 

Between  these  two  descriptions  of  superior  currency  there  are 
these  important  differences,  to  wit : — 

That  the  note  represents  actual  property  of  the  parties  by  whom 
it  is  issued,  that  property  having  been  deposited  in  the  Treasury  as 
scurity  for  its  redemption  ;  whereas  the  credit  represents  property 
temporarily  deposited  in  the  banks,  and  liable  to  be  claimed  at  any 
instant : 

That,  while  the  note  cannot  be  so  used  as  in  any  manner  to  change 
its  relation  to  the  total  currency,  the  credit  may  be,  and  habitually 
is,  so  used  as  to  duplicate  its  relation  thereto — A,  the  actual  owner, 
and  B,  the  temporary  user  thereof,  both  exercising  equal  power  of 
purchase  and  equal  power  to  create  a  currency  of  checks  or  drafts 
— that  superior  one  with  the  growth  of  which  there  should  be  di- 
minished need  for  circulating  notes  : 

That,  as  the  inferior  of  these  two  currencies — the  note — yields  no 
interest  to  its  holder,  all  desire  to  circumscribe  within  the  narrow- 
est limits  the  quantity  to  be  kept  on  hand  : 

That,  as  the  superior  one — the  credit — yields  interest  to  its 
makers,  banks  and  bankers  seek  as  far  as  possible  to  increase  it  by 
lending  out  all  the  moneys  standing  to  the  credit  of  their  customers : 

That,  as  the  people  at  large  find  their  interest  promoted  by  limit- 
ing the  use  of  circulating  notes  the  quantity  in  actual  use  changes, 
under  ordinary  circumstances,  so  slowly  as  scarcely  to  be  perceived; 
whereas,  the  quantity  of  credits,  dependent  as  it  is  upon  the  arbi- 
trary will  of  banks  and  bankers,  changes  from  hour  to  hour,  and 
with  a  rapidity  that  sets  at  defiance  all  calculation : 

That,  consequently,  it  is  the  power  to  create  the  superior  currency, 
that  based  on  mere  credits,  which  demands  to  be  regulated  by  law ; 
and  not  that  inferior  one  which  is  based  on  property,  and  which  finds 
its  proper  regulation  in  the  need  for  its  use  by  the  masses  of  the 
people. 

These  things  premised,  we  may  now  study  the  course  of  things 
under  the  State  bank  system,  taking  as  its  type  the  returns  of 
1860,  as  follows,  the  figures  representing  millions  : — 

Capital  and  Excess 

Capital.  Circulation,    circulation.  Investments,  investm'ts. 

Total  amount          .  .        422          207  629  807  178 

New  York  and  New  England      235  73  308  443  135 

All  other  States  and  Territories  187          134  321  364  43 

The  first  thing  that  strikes  us  on  an  examination  of  this  table  is 
the  entire  harmony  of  the  facts  here  presented  with  the  theory  of 
the  Secretary,  and  with  the  general  impressions  on  the  subject,  the 
proportion  of  circulating  notes  to  capital  and  business  having  been 
very  small  in  those  States  in  which  a  credit  currency  most  abound- 
ed, and  very  large  in  those  in  which  such  credits  were  least  abund- 
ant. With  a  bank  capital  of  but  $235,000,000,  New  York  and  New 
England  had  the  use  of  $135,000,000  of  credits  created  by  banks 
for  their  own  use  and  profit,  being  nearly  twice  more  than  the 
amount  of  their  circulation.  With  a  capital  only  one-fifth  less,  the 
remaining  people  of  the  Union  appear  to  have  enjoyed  the  advan- 
tages of  the  superior  currency  to  the  extent  of  but  $43,000,000,  and 


45 

their  banks  to  have  been  dependent  upon  the  profits  of  circulation 
to  an  amount  equal  to  three-fourths  of  their  whole  capital,  being 
about  twice  that  of  the  trading  States  above  enumerated. 

The  total  currency  created  by  banks  for  their  own  profit  appears 
to  have  been  as  follows  : — 

Now  York  and  New  England,  with  a  population  of  f , 000,000, 
and  a  wealth,  as  returned  by  the  census,  of  $3,707,000,000,  had 
credits  based  upon  moneys  temporarily  in  banks  to  the  extent 

of $135,000,000 

Circulation  13,000,000 


Total $208,000,000 

The  remaining  States,  with  a  population  exceeding  twenty-four 
millions,  and  a  wealth  of  $11,558,000,000,  or  more  than  thrice 
greater,  had  a  bank-created  currency  thus  composed,  to  wit : — 

Credits $43,000,000 

Circulation 134,000,000 


$177,000,000 

In  the  one  case  banks  might  have  lived  and  prospered,  even  had 
they  been  wholly  deprived  of  the  profits  of  circulation.  In  the 
other,  outside  of  a  few  cities,  no  bank  deprived  of  those  profits 
could  have  existed. 

Fully  enjoying  the  advantages  of  both  the  people  of  the  one 
could  generally  have  the  use  of  money  at  about  the  legal  rate  of 
interest.  Limited  almost  entirely  to  the  circulation,  and  that  itself 
in  many  cases  limited  by  absurd  restrictions,  those  of  the  other 
were  accustomed  to  pay  twice,  thrice,  and  even  four  times  that 
rate.  With  the  one  prompt  payment  was  a  thing  of  general  oc- 
currence. With  the  other,  debt  was  almost  universal,  not  because 
of  want  of  property,  but  because  throughout  a  large  portion  of  the 
country  there  existed  neither  credits,  circulating  notes,  nor  any 
other  general  medium  of  exchange  whatsoever. 

Such  having  been  the  state  of  things  seven  years  since,  under 
the  State  bank  S3rstem,  we  may  now  examine  the  working  of  the, 
so-styled,  national  system,  with  a  view  to  see  if  it  has  tended  to 
correction  or  to  exaggeration  of  the  difficulties  that  then  existed. 

§  2.  Under  the  State  bank  system,  as  has  been  shown,  the  distri- 
bution of  credits  and  circulation  among  ths  States  was  very  nearly 
in  accordance  with  the  Secretary's  present  teachings.  How  far  it 
is  so  now,  under  this,  so-called,  national  one,  organized  by  the  Sec- 
retary himself,  it  is  proposed  here  to  show. 

By  the  report  of  the  Comptroller,  just  now  published,  the  follow- 
ing was  the  state  of  things  in  October,  1867,  two  years  having  then 
elapsed  since  the  date  of  the  Secretary's  declaration  of  war  upon 
circulating  notes  issued  at  Fort  Wayne,  by  which  the  public  were 
advised  that  "  paper  money"  was  too  abundant,  that  speculation 
must  cease,  and  that  "  contraction"  must  be  the  order  of  the  day, 
the  figures,  as  before,  representing  millions : — 


46 

Banking  Capital  and    Invest-    Excess  in- 

capital.     Circulation,     circulation,     ments.    vestments. 

Total 420  297  717          1103        386 

New  York  and  New  England         260  173  433  677        234 

All  other  States  and  Territories     160  124  284  326         152 

The  total  circulation  had,  in  seven  years,  increased  90,000,000, 
but  instead  of  finding  that  increase  in  those  parts  of  the  country 
in  which  credit  least  abounded  and  circulating  notes  were  most 
needed,  we  find  the  whole  of  it,  and  even  10,000,000  more,  to  have 
been  distributed  by  the  then  Comptroller,  and  now  Secretary,  to 
those  very  States  in  which  credits  were  most  abundant  and  a  paper 
circulation  least  required. 

Comparing  now  the  bank-created  currency  of  the  two  periods,  we 
obtain  the  following  figures  : — 

I860.  1867.    Increase. 
New  York  and  New  England,  present  population  7,000,000 — 

Credit  currency 135     234 

Circulation  73    173 

Total .  208  407      199 

Other  States  and  Territories,  population  30,000,000— 

Credits 43  152 

Circulation 134  124 

Total 177    276        99 

In  the  first,  population  could  have  but  very  slightly  grown.  In 
the  other  it  had  increased  to  the  extent  of  many  millions,  and  yet, 
while  nearly  two  hundred  millions  had  been  added  to  the  one,  less 
than  one  hundred  had  been  secured  by  the  latter.  Such  has  been 
the  working  of  a  system  that  is  styled  national,  but  that  is  not  only 
sectional  as  regards  the  North  and  the  South,  but  also  as  regards 
the  Centre  and  the  West  as  against  the  North  and  the  East. 

In  the  intervening  period  the  necessities  of  our  people  for  a 
general  medium  of  circulation  had  grown  south  and  west  of  New 
York  thrice  more  rapidly  than  in  the  country  north  and  east  of  the 
Delaware.  In  many  of  the  older  States,  poorly  supplied  before, 
the  check  and  draft  currency  had  wholly  disappeared.  Throughout 
the  West  new  territories  had  been  settled,  and  new  States  had  been 
created,  in  which  credit  had  as  yet  obtained  no  foothold  what- 
soever. Nevertheless,  in  the  vast  region  south  and  west  of  New 
York,  with  four-fifths  of  the  total  population  of  the  Union  and 
two-thirds  of  its  wealth,  the  quantity  of  circulation  granted  by  the 
financier  who  has  so  much  complained  of  the  "  plethora  of  paper 
money"  has  been,  as  here  is  shown,  $10,000,000  less  than  it  had 
been  when  Kansas  was  but  beginning  to  be  settled,  and  when  many 
of  the  present  States  and  territories  had  scarcely  yet  found  a  place 
on  any  map  whatsoever. 

Bad  as  is  this  exhibit,  and  much  as  such  a  state  of  things  must 
tend  to  prevent  the  approach  of  financial  peace,  that  presented  by 
an  examination  of  the  operations  of  our  chief  commercial  cities  is 
infinitely  worse,  as  1  propose  to  show  in  another  letter,  meanwhile 
remaining,  very  truly  and  respectfully,  yours, 

GEN.  U.  S.  GRANT.  HENRY  C.  CAREY. 

PHILADELPHIA,  Dec.  25,  1868. 


47 


LETTER  EIGHTH. 

DEAR  SIR  : — 

Circulating  notes,  as  the  Secretary  assures  us,  are  least  needed 
•win-re  credit  currency  most  abounds.  Cities,  then,  are  the  places 
at  which  banks  least  need  to  avail  themselves  of  the  privilege  of 
furnishing  circulation.  That  such  was  the  practice  under  the  State 
bank  system  is  well  known  to  all.  How  it  is  now,  under  the  one 
organized  by  the  Secretary  himself,  and  how  his  system  compares 
with  that  he  had  found  established,  is  shown  by  the  following 
figures,  representing,  as  before,  millions : — 

OCTOBER,  1860. 

Capital  and  Excess  of 

Capital.    Circulation,     circulation.  Loans.  loans. 

New  York         ...         69                10                79  123  44 

Boston              ...        35                  7                42  64  22 

Philadelphia                              12                 3                15  27  12 

116  20  136  214  78 

OCTOBER,  1867. 

New  York        ...         75                 35  110  241               131 

Boston     ....         42                24  66  101                 35 

Philadelphia                              16                11  27  59 

133  70  203  401  198 

Of  $90,000,000  addition  to  the  currency  in  that  form  of  which 
the  Secretary  is  now  so  generally  accustomed  to  speak  as  "  paper 
money,"  no  less  than  $50,000,000  are  here  shown  to  have  been 
given,  and  given,  too,  by  himself  as  Comptroller  of  the  Currency, 
to  those  three  communities  in  which,  by  his  present  showing,  circu- 
lating notes  had  been  least  required;  $10,000,000  having  at  the 
same  time  been  withdrawn  from  the  country  south  and  west  of  New 
York,  embracing  States  and  Territories  almost  forty  in  number, 
with  a  population  numbering  little  less  than  30,000,000,  and  grow- 
ing by  millions  annually,  the  needs  of  these  for  some  general  medium 
of  circulation  being,  man  for  man,  thrice  greater  than  those  of  the 
people  of  the  cities  whose  past  and  present  have  been  above  de- 
scribed. The  Secretary's  theories,  as  given  in  the  passage  of  his 
report  heretofore  quoted,  are  excellent.  Can  he  now  explain  why 
it  is  that  his  practice  has  been  so  diiferent  ? 

The  bank-created  currency  of  those  cities  at  the  same  periods 
may  thus  be  stated : — 

I860.  1867. 

Credits  based  on  loans  of  moneys  at  the  credit  of  individuals     80         '198 
Circulation 20  70 

100          268 

1  Tliis  is  probably  much  less  than  the  truth,  there  being  checks  and  "  cash 
items"  that  to  some  extent  must  have  borne  interest.  Opposed  to  them  there 
are  surplus  funds  which  are  additions  to  capital.  The  one  would  probably 
balance  the  other. 


48 

The  Secretary  denounces  speculation,  and  professes  to  be  earnest 
in  his  desire  to  put  it  down.  Nevertheless,  here,  in  the  very  centres 
of  speculation,  three  great  trading  cities,  we  have,  under  a  system 
organized  by  himself,  an  increase  of  currency  amounting  to  $168,- 
000,000,  or  within  little  more  than  $60,000,000  of  the  total  quantity 
that,  excluding  Philadelphia,  is  allowed  to  all  the  States  and  Terri- 
tories of  the  Union  south  and  west  of  New  York,  with  four  times 
the  population  and  with  twice  the  wealth  of  New  York  and  New 
England.  Not  content,  even,  with  this,  the  great  opponent  of  specu- 
lation and  of  "  paper  money"  has  been  unwearied  in  his  efforts  still 
further  to  deplete  the  centre,  the  west,  and  the  south,  and  to  per- 
fect the  centralization  already  so  far  established,  by  compelling  all 
their  banks  to  provide  in  one  alone  of  them  funds  for  redemption 
of  their  circulation,  after  having  already  provided  for  the  same  by 
deposits  in  his  own  hands  at  Washington.  A  better  provision  for 
maintenance  and  extension  of  the  speculative  spirit,  so  often  and 
so  bitterly  denounced  by  himself,  and  for  preventing  resumption 
either  now  or  at  any  future  time,  could  scarcely  have  been  devised. 

The  50,000,000  additional  circulation  thus  injected  into  the  great 
centres  do  more,  my  dear  sir,  to  cause  "inflation,"  than  would  be 
done  by  500,000,000  of  the  one,  two,  and  five  dollar  notes  required 
"  for  the  retail  trade,  for  travelling  expenses,  and  for  the  purchase 
of  products  at  first  hands,"  those  purposes  for  which  the  money  is 
really,  in  the  Secretary's  view,  to  be  regarded  as  a  "  necessity." 
By  whom,  however,  were  they  so  injected  ?  By  the  Secretary  him- 
self, in  his  capacity  of  Comptroller  of  the  Currency !  He,  there- 
fore, it  is,  who  is  to  be  regarded  as  the  great  "inflationist;"  yet 
does  it  please  his  friends  to  style  as  such  all  those  who  fail  to  see 
that  resumption  of  specie  payments  can  by  any  possibility  be 
attained  by  means  of  measures  tending  to  total  destruction  of  the 
societary  circulation. 

"  Capitals,"  said  Mirabeau,  "  are  necessities,  but  if  the  head  is 
allowed  to  grow  too  large,  the  body  becomes  apoplectic,  and  wastes 
away."  That,  precisely,  is  what  is  here  occurring,  the  whole  ten- 
denc^y  of  the  present  monopoly  system  being  in  the  direction  of 
causing  accumulation  of  blood  in  and  about  the  societary  heart,  to 
the  utter  destruction  of  circulation  throughout  the  body  and  limbs. 
Hence  it  is  that,  property  in  New  York  city  has  attained  such  enor- 
mous prices,  and  that  we  are  now  daily  called  upon  to  read  of  the 
"  unparalleled  advance"  that,  according  to  the  Tribune,  chief  advo- 
cate of  prompt  resumption  as  it  is,  has  taken  place  in  the  adjoining 
States,  New  Jersey  and  Connecticut.  Passing  outward,  however, 
south  and  west,  we  find  a  totally  different  state  of  things,  miners, 
and  laborers  being  thrown  altogether  idle,  and  the  depression  there 
being  quite  as  little  to  be  "paralleled"  as  is  the  advance  in  the 
States  so  liberally  patronized  by  our  consistent  Finance  Minister. 

To  find  his  system  working  in  full  perfection  we  need,  however, 
to  look  further  south — to  Georgia,  Carolina,  and  Alabama.  Doing 
this,  we  find  the  special  advocate  of  the  Secretary's  most  unphilo- 
sophical  and  most  exhaustive  system,  speaking  to  its  readers  in  the 
words  that  follow  : — 


40 

"  A  correspondent,  writing  from  Ilinesville,  Liberty  County,  Georgia,  says :  '  A 
Bale  has  taken  place  at  this  county  seat  that  so  well  marked  the  extreme  depres- 
sion in  the  money  market  tbat  I  send  you  the  particulars  :  Colonel  Quarter- 
man,  of  this  county,  deceased,  and  his  executor,  Judge  Featter,  was  compelled 
to  close  the  estate.  The  property  was  advertised,  as  required  by  law,  and  on 
last  court  day  it  was  sold.  A  handsome  residence  at  Walthourville,  with  ten 
acres  attached,  out-houses,  and  all  the  necessary  appendages  of  a  first-class 
planter's  residence,  was  sold  for  $60.  The  purchaser  was  the  agent  of  the  Freed- 
men's  Bureau.  His  plantation,  four  hundred  and  fifty  acres  of  prime  land, 
brought  $150;  sold  to  a  Mr.  Fraser.  Sixty-six  acres  of  other  land,  near  Wal- 
thourville, brought  three  dollars  ;  purchaser  Mr.  W.  D.  Bacon.  These  were  all 
bona  fide  sales.  It  was  court  day,  and  a  large  concourse  of  people  were  present. 
The  most  of  them  were  large  property  owners,  but  really  had  not  five  dollars  in 
their  pockets,  and  in  consequence  would  not  bid,  as  the  sales  were  for  cash.' 
lu  Montgomery,  Alabama,  lots  on  Market  Street,  near  the  Capitol,  well  located, 
50  feet  by  110  feet,  averaged  about  $250  each.  The  Welsh  residence  on  Perry 
Street,  two-story  dwelling-houses,  including  four  lots,  sold  for  $3500  ;  Dr.  Robert 
M.  Williams  was  the  purchaser.  The  same  property  in  better  times  would  not 
have  brought  less  than  $10,000.  The  Loftin  Place,. near  Montgomery,  contain- 
ing 1000  acres,  was  recently  rented  at  auction  for  forty  cents  an  acre.  The 
same  lands  rented  the  present  year  for  three  dollars  an  acre.  About  thirty  real 
estate  transfers  were  recorded  in  Nashville  last  week ;  prices  were  low.  In 
Portsmouth,  Virginia,  a  house  and  lot,  formerly  of  the  Reed  estate,  situated  on 
the  south  side  of  County  Street,  near  the  intersection  with  Washington,  was 
recently  sold  to  Mr.  Ames  for  $750.  A  building  lot  at  the  intersection  of  South 
and  Bart  Streets,  brought  only  $125.  A  portion  of  Woodland,  the  late  Judge 
John  Webb  Tyler's  estate  in  Prince  William  County,  Virginia,  has  been  pur- 
chased by  Mr.  Delaware  Davis,  of  New  Jersey,  at  $20  an  acre." 

The  more  the  blood  is  driven  to  the  heart  the  more  do  the  limbs 
become  enfeebled,  and  the  greater  becomes  the  liability  to  para- 
lysis, to  be  followed  by  death.  The  Secretary  has  been,  and  still  is, 
driving  all  the  blood  of  the  Union  into  the  States  and  cities  of  the 
north  and  east,  and  with  every  step  in  that  direction  the  circulation 
becomes  more  and  more  torpid  and  the  paralysis  more  complete. 

§  2.  Of  the  agricultural  departments  of  France  a  very  large  pro- 
portion are  steadily  declining  in  population,  the  main  reason  there- 
for, as  given  in  a  highly  interesting  paper  recently  published,* 
being  to  be  found  in  "  a  total  absence  of  that  power  to  supply 
themselves  with  circulating  notes  which  elsewhere  results  from  the 
presence  of  banks  or  other  establishments  of  credit,  or  that  of  in- 
dividuals whose  signatures  to  such  notes  command  the  public  con- 
fidence." 

Agriculture,  for  this  reason,  fails  in  those  districts  to  obtain  the 
aid  of  capital,  except  on  conditions  so  onerous  as  to  be  ruinous  to 
the  borrower.  Just  so  has  it  always  been  throughout  more  than 
half  the  Union ;  the  fanners  of  the  Mississippi  Valley,  and  the 
planters  of  the  South  and  Southwest  having  been,  even  before  the 
war,  compelled  to  pay  for  the  use  of  circulating  notes  twice,  thrice, 
and  often  even  five  times  the  rate  of  interest  paid  by  their  brother 
agriculturists  of  New  England  and  New  York. 

So  did  it  continue  to  be  until  the  needs  of  war  compelled  the 
Treasury  to  do  that  which  it  should  long  before  have  done,  furnish 
a  national  machinery  of  circulation,  by  means  of  which  the  farmer 
might  be  enabled  to  buy  and  sell  for  cash,  and  to  pay  in  cash  his  mason 

*  Journal  des  Economistes,  Septembre,  18C7 


50 

and  his  carpenter;  thereby,  and  for  the  first  time  in  our  history, 
enabling  these  latter  in  their  turn  to  acquire  that  feeling  of  real  in- 
dependence which  results  from  exercise  of  power  to  choose  among 
contending  shopkeepers  that  one  which  would  most  cheaply  supply 
the  cloth,  the  coffee,  or  the  sugar  required  by  their  families  and 
themselves.  At  once  the  whole  position  of  affairs  was  changed ; 
the  needy  farmer  and  laborer,  begging  for  credit,  disappearing  from 
the  stage,  and  the  anxious  trader,  begging  for  their  custom,  taking 
their  place.  It  was  a  revolution  more  prompt,  more  complete,  and 
more  beneficial  than  any  other  recorded  in  financial  history ;  its 
effect  having  been  that  of  supplying  the  inferior,  the  most  useful, 
and  the  least  dangerous  currency — the  note — to  those  portions  of  the 
country  which,  while  abounding  in  labor  and  in  natural  wealth, 
were  as  yet  too  poor  to  command  the  services  of  that  superior  one 
— the  credit — by  which,  in  the  course  of  time  and  in  accordance 
with  the  Secretary's  present  teachings,  it  was  to  be  replaced. 

Of  all  the  machinery  of  commerce  there  is  none  which  renders  so 
large  amount  of  service  as  that  which  facilitates  exchanges  from 
hand  to  hand.  The  more  it  abounds  the  more  rapid  is  the  circula- 
tion, and,  as  in  the  physical  body,  the  greater  are  the  health,  the 
strength,  and  the  force.  It  is,  however,  the  one  that  is  always  last 
obtained,  and  most  difficult  to  be  retained.  In  furnishing  it  gratuit- 
ously to  the  centre,  south,  and  west,  the  Treasury  rendered  a  larger 
amount  of  service  to  our  whole  people  than  it  would  have  done 
had  it  given  the  gratuitous  use  of  railroads  whose  cost  would  have 
been  thrice  as  great  as  its  own  amount.  That  service  was  found  in 
the  increased  demand  for  labor,  to  the  great  advantage  of  those 
who  had  it  in  its  various  forms  for  sale — the  farmers,  mechanics, 
and  laborers  of  the  Union.  To  some  extent,  however,  it  damaged 
those  who  made  no  profitable  use  of  their  own  physical  or  mental 
faculties — annuitants,  mortgagees,  and  other  persons  in  the  receipt 
of  fixed  incomes. 

That,  however,  is  the  necessary  result  of  beneficial  changes  of 
every  kind,  all  such  improvements  manifesting  themselves  in  an 
elevation  of  the  labor  of  the  present  at  the  cost  of  accumulations 
of  the  past — the  rate  of  interest  always  falling  as  labor  becomes 
more  productive.  Instead,  however,  of  so  regarding  it,  those  who 
suffered  have,  of  course,  insisted  that  it  had  been  nothing  but  "  a 
forced  loan ;"  that,  for  that  reason,  it  should,  at  the  earliest  possible 
moment,  be  repaid;  and  that  the  whole  people  should  for  their 
benefit,  be  deprived  of  all  the  vast  advantage  which,  under  pressure 
of  the  war,  had  been  so  promptly  gained.  By  whom,  however,  had 
the  loan  been  made?  Had  it  not  been  by  the  whole  body  of  the 
people?  Assuredly  it  had,  and  that  same  body  had  been  the  re- 
cipient of  its  products. 

It  had  been  simply  the  one  great  corporation  of  the  Union  com- 
bining with  its  members  for  obtaining,  free  of  charge,  the  use  of 
machinery  of  inestimable  value  in  default  of  which  the  societary 
circulation  had  previously  been  so  much  and  so  frequently  arrested 
as  to  cause  waste  of  labor  to  an  annual  amount  twice  greater  than 
the  circulation  that  had  thus  been  furnished.  It  was  that  corpora- 
tion combining  with  its  members  for  their  relief  from  the  oppressive 


51 

taxation  of  usurious  capitalists,  money-lenders  on  the  one  hand,  and 
trailers  on  tin1  other.  Of  those  who  made  the  loan  none  complain. 
None  suiR-r;  there  being  not  even  a  single  one  who  cannot,  on  the 
inMant.  be  reimbursed,  obtaining  from  his  neighbor  property  of 
value  fully  equal  to  that  which  he  had  given  for  his  share  of  this, 
so-called  k'k  loan."  AVI) at  they  do  complain  of  is  that,  while  willing 
to  extend  their  loans,  and  to  do  so  without  charge  of  interest  there- 
for, they  are  not  permitted  so  to  do ;  and  here  they  complain  with 
reason. 

The  Secretary  insists,  however,  that  this  is  only  "  paper  money," 
of  which  there  exists,  in  his  opinion,  so  great  a  "  plethora,"  that,  at 
any  sacrifice,  this  loan  must  be  repaid.  Seeking  this  "  plethora," 
we  look  to  the  South  and  find  plantations  being  almost  given  away, 
because  of  the  almost  entire  absence  of  currency  of  any  description 
whatsoever.  Turning  next  to  the  Mississippi  Valley  we  find  cur- 
rency so  scarce  that  manufacturers  and  traders  pay  for  its  use  twice 
and  thrice  the  usual  rate  of  interest ;  farmers,  meanwhile,  finding 
difficulty  in  obtaining  it  on  any  terms  whatsoever. 

Coming  now  to  the  centre,  we  find  it  to  be  so  little  superabundant 
as  to  compel  the  employment  of  bank  certificates — a  sort  of  bastard 
"  paper  money"  that  otherwise  would  not  be  used.  Passing  thence 
to  the  North  and  East,  the  centre  of  speculation,  and  therefore, 
perhaps,  in  both  the  past  and  the  present,  so  largely  favored  by  a 
finance  minister  who  professes  himself  opposed  to  "  speculation," 
we  find  an  abundance,  and  perhaps  even  the  "  plethora"  of  which 
he  has  so  much  and  so  frequently  complained.  Taking,  however, 
the  whole  Union,  we  find  that  of  this  "dishonored  and  dishonorable 
paper  money"  the  quantity  in  actual  circulation  cannot  be  esti- 
mated at  more  than  five  hundred  millions  of  dollars,  or  little  more 
than  a  dozen  dollars  per  head.  With  less  than  half  the  need  of  it, 
per  head,  France  has  a  circulation  more  than  one-half  greater ;  and 
yet,  with  even  this  large  supply,  her  agricultural  districts  are  even 
now  actually  perishing  for  want  of  some  representative  of  money 
to  be  employed  in  the  effectuation  of  exchanges.  Of  all  the  coun- 
tries of  Europe  there  is  none  in  which  there  exists  in  such  complete 
abundance  that  superior  currency  which,  as  the  Secretary  assures 
us,  and  as  we  know  to  be  the  fact,  tends  to  supplant  the  circulating 
note,  as  is  the  case  in  Britain.  Yet  even  there  do  we  find  the  cir- 
culating medium,  per  head,  to  be  far  greater  in  quantity  than  among 
ourselves.  Nevertheless,  with  such  facts  before  him,  and  in  direct 
opposition  to  his  own  most  recent  teachings,  the  Secretary  assures 
us  that  it  is  to  the  excess  of  "  paper  money"  we  are  to  look  when 
desiring  to  find  the  "  obstacle"  which  stands  in  the  way  of  "  a  return 
to  a  stable  currency!" 

Scotland,  as  stated  in  the  article  above  referred  to,  has  for  each 
5£)00  of  her  population  a  place  at  which  money  operations  may  be 
transacted.  Nevertheless,  there  is  no  country  of  Europe  in  which 
circulating  notes  are  so  generally  used.  This,  according  to  the 
Secretary,  should  make  of  it  a  good  place  to  sell  in  and  a  bad  one 
in  which  to  buy;  there  yet  is  none  in  Europe  better  in  which  both 
to  sell  and  to  buy. 

Jersey,  one  of  the  little  Channel  islands,  with  a  population  of 


52 

*55,000  gathered  together  in  a  space  less  than  half  that  embraced 
within  our  city  limits,  has  no  less  than  seventy-three  places  at  which 
monetary  affairs  may  be  transacted ;  and  yet,  with  all  this  vast 
machinery  for  supplying  the  superior  currency,  her  people  use  of 
notes,  none  of  which  are  of  less  than  $5  value,  more  than  $400,000, 
or  almost  $8  per  head.  Add  to  this  the  gold  and  silver  that  must 
necessarily  be  used,  and  we  obtain  a  larger  proportion  than  is  now 
in  use  by  a  people  of  little  less  than  40,000,000,  scattered  over 
half  a  continent,  among  by  far  the  larger  portion  of  whom  there 
exist  none  of  those  appliances  by  means  of  which,  in  more  advanced 
communities,  the  use  of  money,  whether  the  precious  metals  or  the 
circulating  note,  is  so  much  economized.  Excluding  New  York  and 
New  England,  and  allowing  for  the  general  absence  here  of  those 
means,  the  circulation  of  Jersey  is  ten  times  greater  per  head  than 
that  of  nearly  forty  of  our  States  and  Territories ;  and  yet,  not  only 
does  this  little  island  enjoy  the  highest  degree  of  prosperity,  but 
there  is  not  a  spot  in  Europe  in  which  excess  of  currency  stands 
less  in  the  way  of  both  buying  and  selling  with  advantage.  The 
facts  and  the  Secretary's  theory  do  not,  therefore,  harmonize  with 
each  other.  So  much  the  worse,  he  will  probably  reply,  for  the  un- 
fortunate facts. 

Such  as  they  are,  my  dear  sir,  they  are  now  placed  before  you,  and 
none  can  as  I  think  hesitate  to  admit  the  general  accuracy  with 
which  they  have  been  presented.  Should  your  leisure  permit  their 
careful  examination,  you  will,  as  I  confidently  believe,  arrive  at  the 
same  conclusion  with  myself,  to  wit :  That  it  is  to  the  existence  of 
a  great  monopoly,  created  under  the  present  banking  law,  we  are 
indebted  for  the  existence  of  most  of  those  obstacles  which  stand 
in  the  way  of  a  restoration  of  financial  peace ;  and,  that  if  we  would 
remedy  the  evils  under  which  we  suffer,  we  must  commence  with 
removal  of  the  cause  to  which  their  existence  is  due. 

How  it  may  be  removed  with  permanent  benefit  to  all,  I  propose 
to  show  in  another  letter,  and  meanwhile  remain, 

Very  respectfully,  yours, 

GEN.  U.  S.  GRANT.  HENRY  C.  CAREY. 

PHILADELPHIA,  December  31,  1868. 


LETTER  NINTH. 

DEAR  SIR  : — 

Seven  years  since  there  still  existed  among  the  States  in  refer- 
ence to  one  of  the  most  important  of  all  questions — the  establish- 
ment of  institutions  of  credit — a  perfect  equality  of  rights.  Then, 
Illinois  and  Tennessee  stood  exactty  on  a  par  with  New  Hampshire 
and  Yermont,  and  the  little  capitalists  of  Iowa  found  among  the 
statutes  of  the  Union  none  whose  tendency  was  that  of  placing 
them  in  a  position  inferior  to  those  of  Maine  in  reference  to  any 
arrangements  they  might  wish  to  make  for  facilitating  among  them- 
selves exchanges  of  labor  and  labor's  products.  Among  those 


53 

statutes  there  could  be  found  none  whose  direct  effects  had  been, 
and  must  ever  continue  to  be,  that  of  placing  the  men  of  Missouri 
in  the  position  of  "  hewers  of  wood  and  drawers  of  water"  to  the 
more  favored  people  of  New  York  and  Massachusetts.  If  they 
still  continued  to  barter  corn  for  cloth,  hogs  for  sugar,  it  was  not 
because  of  interference  of  the  Federal  Government  forbidding  the 
adoption  of  measures  tending  towards  enabling  them  to  adopt  the 
more  civilized  process  of  purchase  and  sale.  If  they  continued  to 
pay  20,  30,  or  40  per  cent,  for  the  use  of  circulating  notes  furnished 
by  Eastern  banks,  they  had  before  them  at  least  the  hope  that  with 
time  they  might  be  enabled  to  establish  institutions  that  would 
furnish  such  at  more  reasonable  rates  of  interest.  With  the  war, 
however,  there  came  in  this  respect  a  total  change,  Congress 
having  soon  after  its  commencement  enacted  that  before  any  asso- 
ciation of  capitalists,  large  or  small,  could  be  permitted  to  com- 
mence supplying  their  neighbors  with  machinery  by  means  of  which 
to  make  their  various  exchanges,  they  should  lend  to  the  govern- 
ment an  amount  one-ninth  greater  than  that  of  the  circulating 
notes  to  be  supplied ;  and  that  the  bonds  they  were  thus  required  to 
buy  should  be  placed  in  the  Treasury,  to  be  there  held  as  security 
for  pa}Tment  of  the  notes. 

That  done,  and  the  notes  received,  it  was  then  further  required 
that  they  should  purchase  a  certain  proportion  of  Treasury 
notes  payable  on  demand,  to  be  held  by  them  as  further  security 
for  payment  on  presentation  of  any  portion  of  their  own  circu- 
lation. Further,  in  the  event  of  failure  of  payment,  their  stock- 
holders were  made  to  a  certain  extent  individually  liable  for  any 
ultimate  deficiency  of  assets,  whether  as  regarded  holders  of  notes, 
or  owners  of  credits  on  their  books. 

Having  thus  defined  the  terms  on  which  the  several  portions  of 
the  country  might  be  allowed  to  obtain  machinery  of  circulation,  and 
having  provided  such  restrictions  as  rendered  it  m,ost  difficult  so  to 
do  except  in  rich  and  populous  districts,  it  might  have  been  supposed 
that  then  it  would  have  been  everywhere  left  to  the  people  themselves 
to  decide  to  what  extent  they  would  have  institutions  of  credit 
empowered  to  supply  circulating  notes.  Not  so,  however,  the  law 
providing  that  whensoever  such  circulation  should  have  been  issued 
to  the  extent  of  $300,000,000,  all  power  for  further  issue  should 
cease,  and  thus  establishing  a  monopoty  in  the  hands  of  those  who 
first  had  taken  possession  of  the  little  that  had  been  allowed. 

Compliance  with  these  conditions  was  easy  in  those  communities 
within  which  credit  institutions  already  largely  abounded,  and  in 
which,  by  the  Secretary's  own  showing,  circulating  notes  least  were 
needed,  to  wit:  New  York  and  New  England.  Most  difficult, 
however,  must  it  prove  in  all  of  those  in  which  such  notes  most 
were  needed,  to  wit:  the  Centre,  the  West,  and  the  South,  those  in 
which  the  superior  currency  of  checks  and  drafts  least  existed. 
Most  of  all  was  ft  easy  in  those  large  cities  in  which,  as  the  Secre- 
tary informs  us,  "  not  a  fiftieth  part  of  the  business  is  transacted 
by  the  actual  use  of  money ;"  and  in  which.,  as  he  further  says, 
"  except  in  dealings  with  the  government,  for  the  retail  trade,  for 
the  payment  of  labor  and  taxes,  for  travelling  expenses,  the  pur- 


54 

chase  of  products  at  first  hands,  and  for  the  banker's  reserve, 
money  is  hardly  a  necessity."  Such  being  the  case,  it  was  his  duty, 
as  Comptroller  of  the  Currency,  so  to  act  as  to  secure  to  the  States 
and  Territories  least  provided  with  the  superior  currency  the  largest 
possible  share  of  the  limited  quantity  of  the  inferior  one  that  had 
been  thus  allowed.  Directly  the  reverse  of  this,  however,  we  find 
him  to  have  added  $100,000,000  to  the  previously  existing  circula- 
tion of  those  States  in  which  credits  most  existed,  and  $50,000,000 
to  that  of  the  three  cities  in  which  circulating  notes  were  least  of 
all  required;  while  actually  diminishing  by  $10,000,000  the  allow- 
ance to  the  whole  country  south  and  west  of  New  England  and 
New  York. 

By  this  course  of  action  there  was  established  a  monopoly  of 
money  power  without  a  parallel  in  the  world  ;  that  monopoly,  too, 
created  by  the  Secretary  himself  in  those  very  centres  of  specula- 
tion in  which  each  additional  million  does  more  to  produce  "  infla- 
tion" than  could  or  would  be  done  by  a  dozen  millions  scattered 
throughout  the  pockets  of  farmers  and  laborers  of  the  east,  the 
west,  the  south,  or  the  southwest. 

The  counterbalance  to  this  monopoly  was  found  in  the  greenback 
— in  machinery  of  circulation  that  had  been  created  by  the  people 
themselves  for  the  purpose  of  enabling  each  and  all  of  them  readily 
to  exchange  their  services  and  products.  The  one  tended  toward 
giving  capitalists  of  the  cities  power  to  compel  the  interior  more 
and  more  to  depend  on  them  for  performance  of  all  their  exchanges, 
and  thus  to  give  them  more  complete  control  over  the  farmer  and 
the  laborer.  The  other,  on  the  contrary,  tended  toward  enabling 
farmers  and  laborers  to  exchange  among  themselves  freed  from  the 
control  of  city  capitalists ;  and  for  that  reason  it  has  been  that 
these  latter,  the  journals  in  their  pay,  and  the  Treasury  department, 
have  been  so  unwearied  in  their  efforts  to  drive  it  from  the  stage. 

For  accomplishment  of  that  object  they  have  done  their  ut- 
most towards  destroying  the  confidence  of  our  people  in  each 
other,  and  in  the  country's  future.  From  day  to  day  has  "con- 
traction" been  insisted  on,  accompanied  by  the  assurance  that 
prices  must  be  made  to  fall ;  that  property  bought  to-day  must  be 
almost  valueless  to-morrow;  that  mines  opened, furnaces  or  houses 
built,  this  year,  must  prove  in  the  next  to  be  worth  far  less  than 
cost.  Raids  have  been  made  upon  banks.  Interest-bearing  secu- 
rities have  been  withdrawn  from  them  for  the  express  purpose  of 
compelling  them  to  heap  up  greenbacks  in  their  vaults.  Factories 
and  mills  have  been  closed  that  might  and  would  have  con- 
sumed hundreds  of  thousands  of  tons  of  coal  and  bales  of  cotton. 
Mines  have  been  abandoned,  and  manufacturers  have  been  ruined. 
Paralysis  has  been  brought  about  through  the  whole  extent  of  the 
Union,  and  all  these  things  have  been  done  to  the  ends  that  the 
people  might  be  deprived  of  a  circulating  medium  created  by  them- 
selves and  for  themselves ;  that  the  monopoly  of  the  extreme  North 
and  East  might  be  perfected  ;  and  that  the  "  speculator"  might  in 
this  manner  be  driven  from  existence.  To  what  extent  this  latter 
object  has  been  attained,  we  may  now  inquire. 

From  the  report  of  the  Comptroller  of  the  Currency  we  learn  that 


55 

on  the  first  of  January,  18G1,  the  loans  on  private  security  by  the 
banks  of  New  England  and  New  York  were  $404,000,000,  and  that 
in  October  following  not  only  had  there  been  no  contraction,  but 
there  had  been  an  actual  increase  of  their  amount. 

At  the  first  of  those  dates  they  held  $297,000,000  of  interest- 
bearing  public  securities.  At  the  last,  their  amount  had  fallen 
$14,000,000,  the  whole  effect  of  a  nine  months'  vindictive  warfare 
having  been  that  of  compelling  them  to  disgorge  public  securities 
yielding  them  an  annual  interest  of  probably  $800,000.  Placing 
against  this  the  higher  interest  that  lenders  had,  by  means  of  the 
Secretary's  aggressive  policy,  been  enabled  to  secure,  the  balance 
in  favor  of  the  banks  would  probably  count  by  millions,  for  all  of 
which  they  had  been  indebted  to  the  policy  announced  in  the  cele- 
brated but  unfortunate  Fort  Wayne  decree.  The  policy  that  car- 
ried us  through  the  war  favored  those  who  had  labor  to  sell  and 
money  to  borrow.  That  of  the  Secretary,  and  of  the  money  lend- 
ers of  New  York  and  New  England,  favors  those  who  have 
money  to  lend  and  labor  to  buy ;  and  hence  it  is  that  the  societary 
circulation  becomes  daily  more  and  more  impeded,  and  that  the 
Miry  daily  loses  power. 

Throughout  the  North  and  East  there  was  certainly  a  plethora 
of  currency  needing  to  be  corrected.  Has  the  Secretary,  with  all 
his  eiforts,  succeeded  in  making  this  correction  ?  On  the  contrary, 
lie  has  not  only  proved  himself  utterly  powerless  in  that  direction, 
but  has,  by  largely  withdrawing  that  machinery  on  which,  almost 
alone,  were  dependent  the  people  of  more  than  half  the  Union, 
made  the  centres  of  speculation  relatively  far  more  powerful  than 
they  had  ever  been  before. 

His  policy  has  been  wholly  inoperative  in  all  those  centres  of 
speculation  in  which  "not  a  fiftieth  part  of  the  business  is  trans- 
ited by  the  actual  use  of  money,"  the  "plethora"  still  existing 
just  where  the  Secretary  had  himself  created  it;  monetary  starva- 
tion being,  meanwhile,  the  lot  of  two-thirds  of  the  whole  population 
of  the  Union,  and  their  position,  relatively  to  the  highly  specula- 
tive North  and  East,  undergoing  daily  deterioration. 

To  what  extent  this  course  of  action  has  tended  towards  facili- 
tating resumption  may  be  now  examined. 

2.  The  first  step  in  that  direction,  whensoever  it  shall  be  made, 
will  be  the  one  that  shall  tend  to  replace  in  the  Treasury  the 
power  that  had  been  parted  with  at  the  moment  when  the  existing 
monopoly  had  been  created.  As  yet,  every  attempt  in  that  direc- 
tion has  proved  an  entire  failure,  Congress  having  created  a 
monster  which,  thus  far,  has  proved  far  more  powerful  than  its 
creator.  Until  it  shall  be  dethroned — until  it  can  be  deprived  of 
its  present  control  over  both  people  and  State — there  can  be  no 
financial  peace,  and  it  is  with  that  alone  that  resumption  can  ever 
be  brought  about. 

To  the  end  that  such  peace  may  be  established,  we  must  com- 
mence by  doing  justice,  re-establishing,  under  the  National  Bank- 
ing Law.  that  equality  of  rights  of  which  the  Centre,  the  South, 
and  the  West  so  unjustly  have  been  deprived,  and  thus  placing  the 
man  of  Missouri  once  again  on  a  footing  with  his  fellow-citizen  of 


56 

Yermont.  To  do  this  must,  however,  as  we  are  assured,  tend 
to  produce  inflation,  to  raise  prices,  and  thus  to  retard  resumption. 
The  answer  to  this  is,  that  it  is  always  expedient  to  do  right ;  that 
we  may  not  do  evil  that  good  may  come  of  it;  that  universal 
experience  teaches  us  that  honesty  is  the  best  policy;  and,  that  the 
road  towards  financial  peace  cannot  lie  in  the  direction  of  enabling 
the  rich  of  the  North  and  East  to  grow  daily  richer  at  the  sacrifice 
of  the  rights  of  the  poorer  men,  white  and  black,  of  Missouri  and 
Minnesota,  Georgia  and  Mississippi. 

By  whom,  however,  is  it  that  such  assertions  are  made  ?  Is  it 
not  by  the  people  of  New  England,  who  have,  with  their  very 
limited  population,  secured  to  themselves  a  third  of  the  whole 
money  power  of  the  Union  ?  Is  it  not  by  men  of  New  York,  that 
other  State  which  has  secured  to  itself  a  fourth  of  the  whole  circu- 
lation allotted  to  more  than  forty  States  and  Territories,  extending 
over  almost  an  entire  continent?  Is  it  not  by  those  cities  of  the 
North  Atlantic  Coast,  which  have,  by  means  of  the  present  banking 
law,  secured  to  themselves  so  nearly  all  the  power  to  furnish  circu- 
lation which,  before  the  war,  had  been  exercised  by  interior  banks? 
Is  it  not,  everywhere,  by  the  men  who  desire  to  see  a  rise  in  the 
price  of  that  great  commodity,  money,  of  which  they  have  the  com- 
mand, and  a  decline  in  the  prices  of  those  they  need  to  purchase — 
to  wit,  labor  and  labor's  products  ?  To  all  these  questions  there 
can  be  no  answer  other  than  this :  that  we  are  in  the  midst  of  a 
financial  war  whose  object  is  the  maintenance  of  a  monopoly  hostile 
to  the  best  interests  of  the  people  ;  a  monopoly  pending  whose 
existence  there  can  be  no  resumption ;  and,  that  the  first  step  to- 
ward peace  is  to  be  found  in  such  a  re-establishment  of  governmental 
power  as  would  result  from  dissolution  of  the  present  alliance 
with  that  portion  of  the  community  which  desires  that  money  may 
be  dear  and  labor  cheap.  Throughout  the  war  the  Treasury  was 
in  close  alliance  with  those  who  desired  that  money  might  be  cheap 
and  labor  dear,  and  if  it  desires  now  to  bring  about  resumption  it 
must  commence  by  renewal  of  that  understanding  with  the  men 
who  have  labor  to  sell  and  money  to  buy  which  was  brought  to  an 
untimely  end  at  the  moment  when  the  Secretary,  three  years  since, 
fulminated  from  Fort  Wayne  his  declaration  of  war  upon  the  credit 
of  both  the  people  and  the  State. 

3.  That  the  physical  body  may  be  sound  in  health,  there  must 
be  steady  and  rapid  circulation  throughout  the  whole  sj-stem, 
from  the  heart  to  the  extremities,  and  thence  back  again  to 
the  heart.  So,  too,  it  is  with  the  social  body,  societary  health 
being  entirely  inconsistent  with  excessive  circulation  in  the  region 
of  the  heart,  the  extremities  meanwhile  becoming  from  time  to  time 
more  entirely  palsied,  as  is  now  the  case  throughout  the  Union. 
That  this  may  be  corrected,  and  that  there  may  be^established  or 
re-established  throughout  the  Centre,  the  South  and'the  West,  that 
rapidity  of  circulation  without  which  there  can  be  neither  financial 
nor  political  health,  we  need  an  abolition  of  monopoly  privileges. 
That  we  may  then  gradually  calm  the  unnatural  excitement  exist- 
ing in  States  and  cities  which  now  profit  of  that  monopoly  we  need 
the  adoption  of  measures  tending  to  regulate  the  exercise  of  that 


61 

power  over  the  currency  which  results  from  excess  of  loans  and  crea- 
tion of  credits  on  their  books  at  one  moment,  and  violent  diminution 
of  loans  and  suppression  of  credits  at  another,  the  two  combining 
for  the  production  of  excitement  at  one  moment  and  paralysis  at 
another,  and  for  prevention  of  anything  like  permanent  financial 
peace.  To  that  end  we  need  a  law  declaring — 

First,  that  no  bank  shall  hereafter  so  extend  its  investments  as 
to  hold  in  any  form  other  than  those  of  gold,  silver,  U.  S.  notes, 
or  notes  of  national  banks,  more  than  twice  its  capital : 

Second,  that  in  the  case  of  already  existing  banks  whose  invest- 
ments are  outside  of  the  limits  above  described,  any  extension 
thereof  beyond  the  amount  at  which  they  stood  on  the  first  of  the 
present  month  shall  be  followed  by  instant  forfeiture  of  its  charter. 

Having  thus  established  a  check  upon  further  extension,  the 
next  step  should  be  in  the  direction  of  bringing  the  operations  of 
existing  banks  within  proper  limits.  To  that  end,  we  need  a  pro- 
vision imposing  on  all  investment  outside  of  the  limits  above 
described  a  tax  for  the  present  year  of  one  per  cent.  In  the 
second  year  let  it  be  made  1 J  per  cent. ;  in  the  third,  2 ;  and  in  the 
fourth,  3.  Thenceforth  let  the  tax  grow  at  the  rate  of  a  half  per 
cent,  per  annum  until,  by  degrees,  all  banks  shall  have  so  enlarged 
their  capitals,  or  so  reduced  their  loans,  as  to  free  themselves  from 
its  further  payment. 

Holding  interest-paying  securities  to  no  more  than  double  its 
capital,  a  bank  would  be  always  in  a  condition  of  perfect  safety, 
and  could  give  to  its  stockholders  dividends  of  at  least  10  per  cent. 
Such  stock  would  be  preferable  to  almost  any  other  securities  in 
the  market,  and  there  would  be  no  difficulty  in  so  enlarging  the 
foundation  as  to  give  to  the  whole  structure  the  form  of  a  true 
pyramid,  instead  of  that  inverted  one  which  now  presents  itself  to 
the  eye  of  all  observers. 

Under  the  State  bank  system  city  banks  furnished  little  or  no 
circulation.  Why?  Because  their  deposits  enabled  them  to  do 
all  the  business  required  for  making  liberal  dividends  among  their 
shareholders.  The  country  banks  then  monopolized  the  circula- 
tion. Why  ?  Because  with  deposits  small  in  amount  and  with- 
out the  profits  of  circulation  they  could  not  live.  Let  us  have 
such  a  law  as  is  above  described  and  the  city  banks  will  at  once 
find  themselves  forced  to  relinquish  to  their  country  competitors 
the  whole  business  of  furnishing  circulating  notes ;  and  thus  a  second 
great  step  in  the  direction  of  ultimate  resumption  will  have  at  once 
been  made. 

It  may  be  said,  however,  that  banks  are  now  so  heavily  taxed  by 
both  State  and  Federal  Governments  as  to  make  it  difficult  under 
such  restrictions  to  continue  the  business  in  which  they  are  now 
engaged,  and  that  it  is  so  is  probably  the  case.  That  it  may  so 
cease  to  be,  let  the  Treasury  at  once  relinquish  the  few  millions  of 
revenue  which  result  from  bank  taxation,  at  the  same  time  pro- 
viding against  increase  on  the  part  of  the  States.  In  the  whole 
list  of  taxes  there  are  none  so  injurious,  none  which  should  be  so 
carefully  avoided,  as  those  which  tend  to  prevent  the  formation  of 
institutions  of  credit ;  yet  are  State  and  National  Governments  * 


58 

vying  with  each  other  in  the  effort  so  to  squeeze  them  as  almost  to 
drive  them  from  existence  1  Were  all  bank  taxes  abolished ;  were 
the  monopoly  extinguished ;  and  were  governments  to  encourage 
rather  than  prevent  the  formation  of  such  institutions  ;  we  should 
then  be  on  the  road  towards  raising  the  greenback  to  a  level  with 
the  gold  and  silver  coin.  For  every  dollar  so  relinquished  twenty 
would.be  added  to  the  productive  power  of  the  nation  as  a  conse- 
quence of  "the  growth  of  faith  in  the  future  which  would  result  from 
making  that  one  step  in  the  direction  of  financial  peace. 

4.  The  third  step  would  be  found  in  requiring  banks  to  retain, 
in  lieu  of  the  greenbacks  now  required,  all  the  gold  received  from 
the  Treasury  as  interest  on  bonds  therein  deposited.     Had  this 
course  been  pursued  for  three  years  past  they  would  this  day  hold 
sixty  millions  of  gold,  while  the  people  would  have  in  daily  use  an 
equal  amount  of  circulating  notes  that  now  are  hoarded.     Let  it 
be   now   adopted,   the   banking    monopoly   being   simultaneously 
abolished,  and  the  day  will  then  be  close  at  hand  when  the  amount 
of  interest  payable  to  banks  will  reach  $30,000,000  per  annum ; 
when  the  world  at  large  will  see  that  the  day  is  fast  approaching 
on  which  the  greenback  is  to  stand  upon  a  par  with  gold  and  silver ; 
and,  that  if  their  circulation  be  still  continued  it  will  be  because 
our  people  will  then  have  arrived' at  the  conclusion  that  the  way  to 
insure  steadiness  of  monetary  action  is  to  be  found  in  the  direction 
of  maintaining  the  use  of  a  national  medium  of  circulation  not  liable 
to  be  withdrawn  on  every  occasion  of  disturbance  in  the  relations  of 
the  always  belligerent  powers  of  Europe. 

5.  The  national  banking  law  abounds  in  serious  defects,  all  of 
which  must  be  remedied  before  we  can  have  perfect  financial  peace. 
Most  important  of  all,  however,  are  those  above  referred  to,  by 
the  one  of  which  there  was  created  a  Procrustean  Bed  measured 
for  a  body  that  has  already,  though  yet  in  infancy,  far  outgrown 
it ;  while  by  the  other  there  was  placed  in  the  hands  of  a  limited 
number  of  persons,  chiefly  city  bankers,  a  power  so  excessive  that 
it  has  enabled  them  to  set  at  defiance  all  the  power  of  the  govern- 
ment, and  will,  without  action  such  as  is  above  described,  enable 
them  so  to  do  forever  in  the  future. 

By  removal  of  the  first  we  shall  free  ourselves  from  the  absurd 
position  in  which  we  at  this  moment  stand,  that  of  having  proposed 
to  establish  through  the  South  a  system  under  which  money  wages 
were  to  be  paid,  at  the  same  time  refusing  to  either  South  or  West 
that  power  for  creating  the  machinery  in  which  such  payments 
must  be  made,  which  is  so  freely  exercised  throughout  the  North 
and  East. 

By  means  of  the  second  we  shall  not  onty  greatly  limit  the  power 
to  produce  financial  disturbance,  but  also  do  very  much  towards 
limiting  that  extravagance  of  expenditure  to  which  we  stand  now 
indebted  for  an  adverse  balance  of  trade  in  face  of  which  resump- 
tion can  never  seriously  be  thought  of,  and  can,  certainly,  never  be 
brought  about. 

The  three  together  furnish  the  only  terms  upon  which  financial 
peace  can  ever  permanently  be  secured. 

That  we  may  have  political  peace,  and  that  the  Union  may  be 


59 

maintained,  we  must  begin  by  recognizing  the  existence  of  perfect 
equality  among  the  States  in  reference  to  the  power  of  their  people 
to  determine  for  themselves  what  shall  be  the  character  of  the 
machinery  used  in  making  exchanges  from  hand  to  hand,  and  to 
what  extent  it  shall  be  used. 

In  another  letter  I  shall  ask  your  attention,  my  dear  sir,  to  some 
facts  connected  with  the  national  debt,  and  meantime  remain, 
with  great  respect  and  regard, 

Yours  truly, 

GEN.  U.  S.  GRANT.  HENRY  C.  CAREY. 


LETTER  TEXTH. 

DEAR  SIR: — 

THE  surrender  at  Appomattox,  though  giving  us,  so  far  as  regarded  operations 
in  the  field,  the  peace  that  so  anxiously  had  been  desired,  brought  with  it  reason 
for  apprehending  the  reverse  of  peace  in  the  commercial  and  financial  world. 
For  several  years  the  country  had  presented  to  view  a  scene  of  life  and  activity 
the  like  of  which  had  never  anywhere  before  been  witnessed.  All  who  had  had 
labor  or  labor's  products  to  sell  had  found  a  ready  market,  and  among  men, 
too,  who  could  at  once  pay  over  the  price  upon  which  they  had  agreed.  For 
the  first  time  farmers  and  laborers  throughout  the  whole  country  could 
go  cash  in  hand  seeking  their  supplies  among  those  who  could  sell  at  the 
lowest  rate.  Demand  had  gone  ahead  of  supply,  the  economy  of  labor  thus 
produced  exhibiting  itself  in  the  fact  that,  notwithstanding  the  absence  of  a 
million  of  men  in  the  field,  the  nation  had  found  itself  enabled  to  contribute  to 
the  wants  of  government  in  a  manner  so  remarkable  as  to  have  amazed  the  out- 
side world,  while  almost  as  much  astonishing  ourselves.  Never  before  had  it  so 
well  been  proved  that  in  the  social  as  in  the  physical  body  health,  strength, 
and  life  are  the  inseparable  accompaniments  of  rapid  circulation. 

Now,  however,  there  was  threatened  a  serious  change  in  the  power  of  produc- 
tion as  well  as  in  the  machinery  of  circulation.  For  years  we  had  had  in  the 
field  hundreds  of  thousands  of  men  busily  engaged  in  the  work  of  consumption 
while  adding  nothing  to  production.  Thenceforth  their  services  were  to  be 
given  to  increasing  the  supplies  of  food,  clothing,  and  machinery  placed  at  the 
command  of  our  people,  and  there  was  danger  lest,  in  the  absence  of  governmental 
purchases,  the  machinery  of  circulation  might  prove  wholly  insufficient  for 
making  the  exchanges  work  as  smoothly  as  they  till  then  had  done.  More  labor 
would  be  seeking  employment,  and  more  commodities  would  be  in  market  to  be 
exchanged  against  labor,  and  any  stoppage  of  such  exchanges  must  not  only 
affect  the  power  of  the  whole  people  to  provide  satisfactorily  for  their  owu 
wants,  but  also  greatly  impair  their  power  for  aiding  the  various  govern- 
ments, local  and  general,  amid  the  difficulties  in  which,  for  the  moment,  they 
were  involved.  The  interests  of  all  required,  therefore,  that  rapid  circulation 
should  continue  to  be  maintained. 

Throughout  the  war  individuals,  cities,  counties,  States,  had  volunteered 
their  aid  in  a  manner  wholly  without  precedent  in  the  annals  of  the  world. 
To  so  great  an  extent  had  this  been  done  that  it  is  certainly  fair  to  estimate  the 
voluntary  donations  at  $600,000,000,  the  half  of  which,  or  $300,000,01-0,  still 
remained  a  charge  upon  our  people,  involving  payment  of  interest  to  the  annual 
extent  of  little,  if  any,  less  than  $20,000,000. 

The  interest  on  this  local  debt  was  probably  a  full  seventh  of  that  pay- 
able on  the  national  debt.  This  would  seem  to  have  been  but  a  small  pro- 
portion, yet  was  it  really  an  enormous  one  when  we  reflect  that  the  local  govern- 


,..._:    .,    ........   rT,_v   ,.,_.,    .,    .,_    .  ...     ,x       ..    .-  , 

•  ::.A:    :-:   --   '  •. ;.  '  -    -.  -  :    ..-.    _-.-  -  .x-  :.  ::r 

of  this  row  exhibits"  itself  in 


ft  followed,  of  coarse,  that   every  diminution  in  the  prices  of 
r,  er  its  protects,  tended  to  make  the  burthen  more  severe,  while  just  as 

id  labor 
o*  its  wedncis  to  porchjae.     In  the  natural  course  of 


the  jimyr  was  great  that  those  who  bad  so  freely  owe*  of 

Of  the  two,  these  latter 


-  :_-  .:.:.:•--.         :  •/„-    •  :      -     '    -•  -- 

-  --   CT~-     :  :>.-  -  -_. -.-.-.>  -  :.   -    •  :.-:  :  .-   r 

of  remuneration.  To  them  it  was  of 

c:  Ihs 


&s  possible  be 
i  to 

in  the  Usion  *:  lirce.  by  which  the 


i««  lie  ftsstc*«.*r«  «//i/e.    Directly  the  rerene  of  this.we 

exhibited  a  series  of 

by  bnselfaad  having  for  their  efcet  that  of  making 
to  the  world  bow  largo 
that  may  bodono  by  a  man  placed,  as  the  pieacot 

-.  -.  -    -  :.   -  -      •       -r    :       -  i  ..-.-    ;  -*_      _  __  ...      :':  :.. 
:    -.     .—  .:--       -_-*:  ii:"    _.      H  •..-:.-.-  Li:   :  -   :  -n   -  .:-! 
e  befsre  jounafirts  known  to  be  in  his  contdenee  gare  to  the  world 
that  the  prioo  of  gold  was  at  enoe  to  be  ledwed,  and  tl 

For  the  i 


with 

to  take  $«DO,  000,000  at  an  extravagant  rate  of 
to  claim  gold  bonds  at  the  end  of  three  years' 

-n:—  mm  S«sl  :^r;r^i  T-.-.i  s  i-.lira::oa 
':  r  ;  -i.>-:--..      .   :    r   -     --:  -    -    - 

coVement  while  sarin?  neariy  $30.000,000 
i  was  now  to  bs  the  order  of  the  day ;  prices  were  to 

:---  '•':'-    lit:  :ll 
to 

withdrawn;  and  all 
thines  were  to  be  done  that  the  Finance  Minister  might  hare  placed  at 
petal  faoOgOMyOOO  a  year  to  bo  applied  to  payment  of  principal  and 
::  -----    i-        -  •-.--    •.-----:--::_;    . -,    './    '  -    : :-  -.    -•-::- 


!«d  to  pre  in  its 

Very  brief  <ipcii<m«  of  its  cmjcts  was,  however, 
it  to  limit  its  approval  within  $MWO,000  per  month; 


TL±;  in  the  xiopt:^  of  thi* 
be  dear  to  all  who  than 
Union  together,  the  a 

15,  if  eren  lev  tnan  ZV  per 
credit  aal  *    " 


-•-,"-  7 
warn,  i 


States,  where  zueh 

less  free  r  supplied,  it 
Booth,  West,  *- 


any  of  the  f^ures  I  hare 

:  .-  '->'.  •••-.  ---.  '--     -  - 

- 
that  i-A.--  — »t  » hau  be  tootinnrd,  tke j  can  hare  tie 


M:   :     :  :    -  -- 


cent.;   bat  when  the 

Tidnal 

at  which  he  i*  accustomed  to  hare  Li= 

not,  less  than  thrice  the  rate  of  1 

clearly 

reference  to  earlr  extinction  of  the  ir  :  are 

which  the  rich  are  to  be  made  richer  n  the . 

Addisfl  novta 
capital  from  the  real 
nearly  the  whoie  medium  of 
tion  of  the  poor  for  the  I 
in  the  history  of  anr 

§  3.  The  Secretary  s  theory  in 
is  in  direct  conflict  with  hi*  practice  ;  the: 
the  need  for  cireolarinc  nob 


the  latter,  on  the « 

of  that  superior  currency 

where  tends  to  svposede  the  note.     Sotssynswffl  neor  he  •h»««,isit  with 

r-:,.-z;e::  :L-  ;_"..:     --._-:-•!  LT-  ;^.-fc-  :r.  :_,  i:-:r:-     :i__  i:..i  ir 
iz    .:;•-:!-  r  -".:.  :,  -.1.  :1  -  :.'--_:  j  :-  :_^   :::•-:-    :  r-:::   -:::_-:-..; 


I 

ing  thereto. 

Ihewhowferhia 

of 


oC 

,and  towhl-ei 

c:  MV  p^clie  Honritini  mm  now,  •  in  :Lr  fz:^-.  :>  k  vtt 
i:?:    -::.-  v    ;-:.--  -::    : .:.:   -z-  :  :L-    .:-:-.:-  ::  :  .- 
•/..  f  ----  ir-.  1-:  ->  ;    -  .  .   r  -     --T    ,_•:  _;T  :_-  i_;Tr  :_- 
t^r  rrr-'.j  il^:  woo..!  Ihon  :-r 


62 

In  October,  1865,  the  total  debt  was  $2,808,549,000,  of  which  $1,162,000,000 
were  payable  in  gold.  The  total  interest  was  $133,000,000,  of  which  $67,000,000 
were  gold,  and  $66,006,000  currency.  Admitting  now  that  the  character  of  the 
debt  had  remained  unchanged,  and  taking  the  price  of  gold  at  140,  the  quantity 
of  lawful  money  to-day  required  for  payment  of  interest  on  that  amount  of  debt 
would  not  exceed  $150,000,000. 

In  October  last  the  debt  stood  at  but  $2,505,000,000,  the  gold  portion  of  which 
had  grown  to  $2,083,000,000.  Three  hundred  millions  less  in  quantity  it 
DOW  requires  for  interest  nearly  $130,000,000,  being  but  $3,000,000  less  than 
had  been  needed  before  reduction  of  the  principal  had  been  commenced.  Of 
this  the  gold  portion  is  $123,000,000,  being,  at  140,  the  equivalent  of  $173,000,- 
000  lawful  money.  Adding  now  to  this  the  currency  portion,  say  $7,000,000, 
we  obtain  as  the  total  amount  of  lawful  money  this  year  required  for  satisfac- 
tion of  claims  for  interest  no  less  a  sum  than '$180,000,000,  being  $30,000,000 
more  than  had  been  needed  when  the  debt,  as  stated  by  the  Secretary  himself, 
had  been  $300,000,000  greater.  Adding  further  the  interest  on  these  $300,000,- 
000,  we  obtain  $198,000,000  as  the  amount  now  payable  by  individuals  or  the 
State  on  the  same  amount  of  debt  which  had  existed  at  the  date  of  the  de- 
cree which  announced  "contraction"  as  being  the  order  of  the  day;  and  by 
means  of  which  confidence,  public  and  private,  has  been  destroyed,  and  the 
societary  movement  so  thoroughly  paralyzed  that  the  payment  of  even  half  of 
this  enormous  amount  would  be  far  more  burthensome  than  would  have  been 
that  of  the  whole  on  the  day  on  which  the  Secretary  entered  on  his  most  des- 
tructive career.  In  all  other  countries  the  public  credit  improves  with  dimi- 
nution of  the  need  for  loans.  Here,  under  our  admirable  system  of  finance,  it 
seems,  on  the  contrary,  to  deteriorate  as  the  debt  is  more  and  more  diminished. 

The  remarkable  fact  is  thus  presented,  that  precisely  as  the  paralysis  becomes 
more  general — precisely  as  labor  and  all  its  products  fall  in  price — precisely  as 
lawful  money  becomes  more  valuable  in  the  hands  of  those  who  hold  it — pre- 
cisely as  it  becomes  less  and  less  attainable  by  those  who  need  to  get  it — pre- 
cisely as  taxation  becomes  more  and  more  burthensome — precisely  as  these 
phenomena  become  more  general  throughout  the  land — the  quantity  of  lawful 
'money  required  for  satisfaction  of  the  claims  of  bondholders  increases  ;  the 
poor  being  thus  made  poorer  while  the  rich  are  being  made  richer,  and  banks, 
bankers,  and  treasury  agents  building  palaces,  while  mills  and  mines  are  being 
closed,  and  working  men  and  women  deprived  of  power  to  obtain  either  the 
food  or  the  clothing  required  by  their  families  and  themselves. 

On  an  average  the  prices  of  labor  and  its  products  are  at  least  a  third  less 
than  had  been  the  case  at  the  date  on  which  the  Secretary  announced  to  Con- 
gress and  the  people  his  determination  to  enforce  "  contraction."  The  $i80,- 
000,000  lawful  money  of  to-day  would  therefore  purchase  almost  as  much  as 
could  have  then  been  bought  with  $300,000,000.  As  but  half  this  latter  sum, 
or  $150,000,000,  was  then  required,  it  is  clear  that  the  burthen  of  taxation  for 
payment  of  interest  has,  except  among  the  bondholders  themselves,  by  means 
of  the  Secretary's  policy  been  nearly  doubled.  Hence  it  is  that  the  cry  has  be- 
come so  general  for  discharge  of  the  principal  in  lawful  money!  Hence  it  is 
that  the  word  repudiation  is  now  so  freely  used  !  That  it  shall  soon  become 
universal  all  that  is  needed  is  that  the  Secretary  be  allowed  by  Congress  to  pro- 
ceed in  the  substitution  of  gold  bonds  for  greenbacks,  and  for  all  other  securities 
that  make  no  demand  for  gold,  whether  for  principal  or  interest. 

Were  it  not  for  his  profession  of  desire  to  maintain  the  public  faith  there  would 
be  good  reason  for  believing  that,  determined  upon  bringing  about  repudiation, 
he  had  arrived  at  the  conclusion  that  the  shortest  road  thereto  lay  in  the  direc- 
tion of  making  the  debt  from  day  to  day  more  burdensome.  Certain  it  is  that 
had  such  been  his  wish,  he  could  have  chosen  no  better  course  of  operation 
than  that  so  consistently  pursued  almost  from  the  hour  that  he  was  so  unfor- 
tunately placed  in  the  direction  of  the  national  finances. 

How  this  tends  to  produce  the  present  demand  for  gold  and  bonds  for  export- 
ation will  be  shown  in  another  and  concluding  letter,  and  meanwhile  I  remain, 
Yours  very  respectfully, 

HENRY  C.  CAREY. 
GEN.  U.  S.  GRANT. 
PHILADELPHIA,  January  13,  1868. 


63 


LETTER  ELEVENTH. 

DEAR  SIR:  — 

1.  Tli us  far  the  Secretary's  measures  Lave  all  looked  in  the  direction  of 
diminishing  the  machinery  of  circulation,  diminishing  the  productive  powers 
of  the  nation,  and  destroying  both  individual  and  national  credit ;  and 
therefore  is  it  that  now,  after  nearly  four  years  of  peace,  the  Treasury 
is  paying  interest  at  a  rate  more  than  twice  greater  than  that  paid  by  Eng- 
land or  by  France  —  a  rate  nowhere  paralleled  among  nations  with  any 
real  claims  to  rank  as  civilized.  As  a  consequence  of  this  our  institutions  of 
credit  invest  their  means  in  Treasury  bonds  where  before  the  war  they  would 
have  been  applied  to  meeting  the  demands  of  commerce.  As  a  further  conse- 
quence, thousands  of  individuals  have  withdrawn  themselves  from  the  active 
pursuits  of  life,  finding  it  more  profitable,  and  freer  from  risk,  to  accept  in  the 
form  of  interest  returns  almost  as  large  as  were  before  obtained  by  those  engaged 
in  manufactures  or  in  trade.  Maintenance  of  the  bank  monopoly  enables 
stockholders  to  obtain  dividends  varying  between  12  and  25  per  cent.  ;  and 
thus,  look  where  we  may,  we  find  the  whole  Treasury  power  to  have  been,  and 
now  to  be,  exerted  in  the  direction  of  enriching  the  already  rich,  while  deplet- 
ing those  who  need  to  labor,  those  to  whom  it  had  been  almost  entirely  in- 
debted for  the  means  by  aid  of  which  there  had  been  successful  prosecution  of 
the  war.  With  every  step  in  this  direction  luxury  increases  and  importations 
from  abroad  tend  more  and  more  to  make  demand  for  all  the  gold  we  mine  and 
all  the  bonds  we  fabricate.  With  each  there  is  a  growth  of  absenteeism  making 
demand,  for  expenditure  in  foreign  countries,  of  more  of  the  proceeds  of  the  few 
commodities  we  have  for  export.  Such  is  the  result  at  which  we  thus  far  have 
arrived,  a  single  presidential  period  employed  by  the  Treasury  in  producing 
financial  convulsions  having  done  more  towards  the  production  of  a  great 
moneyed  aristocracy,  having  interests  wholly  opposed  to  those  of  the  people  at 
large,  than  could  have  been  the  case  had  all  that  time  been  employed  in  civil 
war. 

So  long  as  almost  millions  of  men  had  been  employed  in  consuming  food, 
clothing,  and  other  commodities,  while  producing  nothing,  farmers,  mechanics, 
miners,  and  workingmen  of  all  descriptions,  could  have  the  use  of  credits,  cir- 
culating notes,  and  all  other  of  the  machinery  of  circulation,  at  moderate  rates 
of  interest.  With  return  of  those  millions  to  production  there  should  have 
been  increase  of  individual  and  national  credit,  enabling  those  who  laboured 
to  obtain  the  use  of  circulating  notes  at  constantly  diminishing  cost  ;  and 
yet,  so  far  is  this  from  being  the  case  that  the  average  rate  thereof  is  now 
rapidly  obtaining  the  height  at  which  it  had  stood  before  the  war,  with  con- 
stantly increasing  necessity  for  return  to  the  practice  of  buying  and  selling  on 
credit  which  had  then  so  universally  existed.  Why  is  this  ?  Let  us  see  ! 

At  the  date  of  the  creation  of  the  existing  bank  monopoly  eleven  States  were 
out  of  the  Union,  while  others  were  in  a  state  so  disturbed  that  their  people 
were  wholly  unable  to  avail  themselves  of  its  provisions,  and  thus  to  establish 
among  themselves  institutions  of  credit  such  as,  under  State  laws,  had  pre- 
viously existed.  Since  then  peace  has  been  restored  ;  new  States  and  Terri- 
tories have  been  organized,  and  old  States  have  been  readmitted;  Pacific  rail- 
roads have  carried  population  through  a  country  of  immense  extent  that 
before  had  been  unoccupied  ;  and  thus  the  field  throughout  which  there  now 
exists  demand  for  institutions  of  credit,  and  for  machinery  of  circulation,  has 
become  at  the  least  thrice,  and  probably  four  times,  greater  than  it  then  had 
been.  To  a  large  extent  this  change  had  occurred  before  the  Secretary's  de- 
claration of  financial  war  issued  from.  Fort  Wayne  in  1865 — that  declaration  to 
which  we  stand  indebted  for  nearly  all  the  financial  trouble  that  has  since 
existed. 

Common  sense  and  common  honesty  at  that  moment  demanded  of  the  Fed- 
5 


64 

eral  Government  removal  of  all  restrictions  by  means  of  which  the  people 
of  the  States  and  Territories  south  and  west  of  the  Hudson  had  been 
to  so  great  an  extent  deprived  of  power  to  create  for  themselves  institutions 
of  credit  and  machinery  of  circulation,  and  so  almost  entirely  made  dependent 
for  this  latter  on  the  extreme  North  and  East.  Had  their  demands  heen 
acceded  to,  had  justice  heen  done,  and  had  the  monopoly  then  been  ter- 
minated, there  would  have  arisen  throughout  all  that  vast  territory  a  de- 
mand for  Treasury  honds  to  be  deposited  in  the  Treasury  itself  as  security 
for  circulation,  to  the  extent  of  at  least  $300,000,000,  thereby  so  far  diminish- 
ing the  necessity  for  sending  them  abroad  as  would  have  made  a  dffi-rcnce 
of  little  less  than  that  entire  sum  in  the  price  received  for  those  that  needed 
to  be  exported.  The  man  who  must  go  to  market  must  pay  the  cost  of  getting 
there,  whether  his  commodity  be  corn,  cotton,  or  bonds,  and  there  is  no  com- 
modity that  so  much  as  these  latter  is  affected  by  any  increase  in  the 
quantity  forced  upon  the  market.  Every  step  of  our  finance  minister  tended 
to  produce  such  increase,  and  hence  it  is  that  the  position  in  which,  so  far 
as  regards  rates  of  interest,  we  at  this  moment  stand  so  nearly  approaches  that 
of  the  least  civilized  portion  of  the  European  world. 

While  thus  by  destroying  the  domestic  market  doing  all  in  his  power  to  in- 
crease the  export  of  bonds,  nothing  has  been  omitted  that  could  tend  to  di- 
minish their  money  value  in  the  eyes  of  foreigners.  The  greater  the  work  to 
be  accomplished,  the  less,  as  it  seemed,  must  be  the  time  allotted  for  having  it 
done.  Hundreds  of  millions  of  bonds  were  forced  upon  the  market  having  but 
three  years  to  run.  Hundreds  of  other  millions,  bearing  no  interest  and  pay- 
able only  at  the  pleasure  of  the  government,  were  forthwith  to  be  extinguished. 
Hundreds  of  millions  of  three  year  bonds  were  then  to  be  replaced  by  others 
redeemable  at  the  pleasure  of  the  government  at  the  end  of  five  years'  grace. 
With  each  and  every  step  in  these  directions  taxes  became  more  and  more 
onerous  and  discontent  more  universal,  and  so  must  they  continue  to  do  until 
at  last  we  shall  see  the  people  arrive,  despite  all  honest  resolutions,  at  final  re- 
pudiation of  the  debt. 

2.  Of  all  maxims  the  greatest  is  that  brief  one  which  teaches  that  to  move 
gently  is  to  move  Bafo\y—fesiina  lente.  Had  the  Secretary  properly  appreciated 
its  value  he  would  have  desired,  as  far  as  possible,  to  relieve  the  present  gene- 
ration from  burthens  created  by  the  war — promoting  the  circulation  of  labor 
and  its  products  while  postponing  to  a  distant  period  payment  of  the  debt 
itself,  and  offering  the  best  security  in  his  power  so  as  to  enable  him  most 
largely  to  reduce  the  rate  of  interest  for  both  the  people  and  the  State.  Had 
he  so  appreciated  it  he  would  have  seen  the  great  States  of  Europe  obtain- 
ing money  at  low  rates  of  interest  by  means  of  creating  securities  running  for 
the  longest  periods,  and  not  liable  to  be  disturbed,  and  must  have  then  been  led 
to  imitate  their  example.  Had  he  so  appreciated  it,  he  would  have  said 
to  Congress,  that  a  security  not  liable  to  be  paid  off  without  consent  of  the 
holders,  bearing  interest  at  the  rate  of  five  per  cent.,  and  subject  to  a  tax  of  teu 
per  cent.,  could  be  sold  far  more  readily  than  another  bearing  the  same  interest, 
free  from  tax,  but  liable  to  be  paid  off  at  the  end  of  even  thirty  years. 

The  question  of  payment,  whether  in  gold  or  paper,  would  by  this  process 
have  been  at  once  placed  out  of  view,  no  holder  of  a  bond  being  required  to 
surrender  it  except  on  terms  agreeable  to  himself. 

The  question  of  taxation  of  bonds,  now  so  freely  used  in  political  warfare, 
would  likewise  have  been  settled. 

On  such  terms  the  amount  required  for  aunnal  interest  might  have  been 
reduced  to  $110,000,000,  one-tenth  of  which  would  have  gone  to  a  sinking-fund 
by  aid  of  which  the  whole  debt  would,  before  the  close  of  half  a  century, 
have  been  extinguished. 

Such,  and  better  even  than  this,  might  have  been  the  arrangement  with  pub- 
lic creditors  had  the  Secretary  sought  to  do  even  justice  to  them  and  to  tax- 
payers as  in  duty  he  was  bound  to  do.  Directly  the  reverse  of  this,  the  whole 
period  of c  his  administration  has  been  characterized  by  a  determination  to  bene- 
fit those  who  had  money  to  lend,  interest  and  commissions  to  receive,  at  the 
cost  of  those  who  had  taxes  and  interest  to  pay,  and  labor  to  sell.  With  every 
step  in  this  direction  there  has  been  such  an  increase  in  the  power  of  public 
creditors  that  it  is  this  day  thrice  greater  than  it  was  four  years  since  when 


G5 

the  Treasury  was  surrounded  with  hungry  claimants  for  settlement  of  their 
accounts.  Then,  less  that  two-fifths  of  tin-  pulilk;  debt  could  make  demand  for 
gold.  Now,  with  exception  of  the  calumniated  greenback,  nearly  the  whole 
lias  been  so  changed  in  form  that  the  Treasury  can. make  no  claim  for  reduc- 
tion of  interest  until  it  shall  be  prepared  to  offer  payment  in  gold  to  all  dis- 
sentients. Between  bank  monopolists  on  one  hand,  and  bondholders  on  the 
other,  it  is,  therefore,  in  a  state  of  helplessness  so  pitiable  as  fully  to  account 
for  the  utter  absence  of  faith  in  our  financial  future  whii  h  now  prevails,  and 
which  causes  the  present  exorbitant  demands  for  interest.  Banks  cannot  be 
compelled  to  resume  until  the  Treasvry  shall  be  pr  pared  to  furnish  gold  for 
every  greenback  that  may  be  presented  for  redemption.  Bondholders  cannot 
toe  compelled  to  accept  low  interest  until  the  Treasury  shall  be  enabled  to 
offer  gold  in  payment  for  the  bonds  already  matured.  In  this  state  of  things 
we  are  assured  that  if  we  will  only  resume,  and  thereby  double  the  already  large 
do/Kind  for  gold,  we  shall  be  enabled  to  sell  our  bonds  at  lowi  r  rates  of  interest ! 

The  first  step  towards  resumption  is  to  be  found  in  relieving  the  Treasury 
from  the  double  thraldom  which  LOW  exists.  It  must  be  enabled  to  dictate  law 
to  both  banks  and  bondholders,  doing  equal  and  exact  justice  to  all,  creditors 
and  debtors,  borrowers  of  money  and  lenders  of  it.  To  that  end,  the  bank 
monopoly  should  be  abolished,  thereby  creating  a  domestic  demand  for  bonds. 
Next,  we  need  to  see  the  creation  of  a  security  bearing  lower  interest,  and  of 
such  character  as  would  enable  the  Treasury  to  say  to  existing  bondholders  that 
they  now  must  choose  between  accepting  it,  or  payment. 

Such  a  security  would  be  found  in  a  six  per  cent,  bond  subject  to  a  tax  of  10 
per  cent.,  and  having  forty  or  forty-five  years  to  run,  by  the  end  of  which  time, 
the  proceeds  of  the  tax  would  have  paid  the  d(bt.  Bonds  deposited  by  banks  and 
bankers  with  the  Treasury  might  be  further  taxed  one  per  cent.  ;  and  this 
would  soon  yield  a  further  sum  of  five  or  six  millions  that  might  be  so  ap- 
plied. Bonds  thus  provided  for  could  be  sold  at  par  for  gold,  and  the  Treasury 
would  thus  be  enabled  to  relieve  itself  at  once  from  that  control  of  public 
creditors  which  now  exists,  while  at  the  same  time  freeing  itself  from  all  need 
for  collecting  taxes  beyond  the  moderate  sum  that,  as  we  have  Reason  to  hope, 
will  be  required  for  meeting  current  demands  upon  it.  Thenceforward  there 
would  be  peace  in  the  financial  world. 

To  the  one  who  might  object  to  this  as  doing  too  much  for  the  public  credit- 
ors the  answer  would  be,  that  the  loss  to  our  whole  people  resulting  from  the 
paralysis  produced  by  the  present  hopeless  Treasury  dependence  counts  annu- 
ally by  hundreds  of  millions  ;  that  all  arrangements  thus  far  suggested  have 
proved  failures,  and  for  the  reason  that  they  have  involved  violations  of  the 
public  faith  ;  and  finally,  that  every  dollar  thus  withdrawn  from  the  Trea- 
sury in  excess  of  the  amount  demanded  by  even  the  most  favorable  of  them 
would  be  more  than  tenfold  made  up  in  the  increased  power  of  production 
resulting  from  the  feeling  of  confidence  that  would  be  produced. 

At  the  present  moment  the  average  public  indebtedness,  of  our  whole  popu- 
lation, exceeds  $60  per  head.  Twenty  years  hence,  to  all  appearance,  it  will 
not,  even  if  uudiminished,  exceed  $30— the  power  per  head,  to  pay  it  having 
meantime  more  than  doubled.  To  hesitate,  under  such  circumstances,  about 
making  with  the  public  creditors  such  fair  and  liberal  terms  as  at  once  to 
command  their  confidence  and  respect  would  be  an  act  of  folly  so  great  that 
it  would  bo  difficult  to  find  words  in  which  to  characterize  it.  The  more 
thoroughly  honest  a  man  shows  himself  the  smaller  is  always  the  cost  at  which 
he  can  command  the  service  of  the  capital  he  needs  to  use. 

3.  The  Sun  and  the  Wind  had  once,  as  ^Isop  tells  us,  a  dispute  as  to  which 
of  theui  could  soonest  compel  the  traveller  to  lay  aside  his  cloak,  and  unable 
otherwise  to  decide  the  question  they  finally  concluded  to  bring  it  to  a  practical 
determination.  Mr.  Wind  taking  precedence,  he  blew  and  blew,  but  the 
louder  his  roar  the  closer  became  the  grasp  of  the  traveller  upon  his  outside  gar- 
ment. Despairing  finally  of  accomplishing  his  object,  he  now  gave  place  to 
Mr.  Sun,  under  the  influence  of  whose  beams  the  hold  upon  the  cloak  was 
gradually  relinquished,  and  at  length  abandoned  altogether. 

Studying  now  our  operations  for  the  past  three  years  we  find  Mr.  Wind  to 
have  been  steadily  at  work,  treasury  threats  of  contraction  having  kept  nearly 
even  pace  with  popular  threats  of  repudiation;  editorial  threats  of  forced  re- 


66 

sumption  having  gone  hand  in  hand  with  an  absenteeism  which  makes  demand 
for  all  the  gold  we  mine  and  all  that  we  import  ;  increase  of  the  public  burthens 
travelling  side  by  side  with  diminution  of  power  for  carrying  the  load  im- 
posed;  and  the  general  result  being  that  of  causing  every  man  who  lias  any- 
thing to  lose  a  desire  to  draw  his  cloak  more  closely  round  him,  and  to  retire 
into  some  nook  or  corner  of  the  commercial  world  in  which  he  may  safely  stand 
until  convinced  that  Mr.  Wind  and  his  companions,  Clouds  and  Darkness, 
had  finally  abandoned  the  field,  yielding  place  to  the  great  source  of  light  and 
heat,  the  Sun,  to  whom  he  might  then  look  to  see — 

That  justice  be  done  to  the  people  of  all  the  States  and  Territories,  placing 
them,  so  far  as  institutions  of  credit  are  concerned,  and  so  far  as  law  can  accom- 
plish that  object,  on  a  footing  precisely  the  same  as  that  now  occupied  by  those 
of  the  Eastern  States  : 

That  justice  be  done  to  the  commerce  of  the  Union  by  bringing  all  such  in- 
stitutions under  regulations  tending  to  produce  that  regularity  of  action  which 
so  long  has  characterized  the  movements  of  those  of  the  Eastern  States: 

That  justice  be  done  to  such  institutions  wherever  situated,  by  relieving  them 
from  taxes,  and  from  absurd  restrictions  now  existing,  the  direct  effect  of  which 
is  that  of  compelling  them  to  overtrade  and  to  incur  risks  the  results  of  which 
are  likely  to  result  in  ruin  to  their  stockholders  : 

That  justice  be  done  to  the  working  men  who  carried  the  country  through 
the  war,  by  abolishing  as  rapidly  as  possible  the  taxation  under  which  so  many 
of  them  now  so  severely  suffer  : 

That  justice  be  done  to  the  public  creditors,  thereby  securing  the  command 
of  capital  at  the  lowest  rate  of  interest ;  and  finally, 

That  justice  be  done  to  the  nation  by  proving  to  the  world  that  in  time  of 
peace  it  is  ready  to  carry  into  full  effect  the  arrangements  that  during  the  war 
so  well  were  understood. 

With  little  exception  the  things  thus  proposed  to  be  done  are  precisely  the 
reverse  of  those  which  have  been  done  since  the  peace,-  and  to  which  we  are  in- 
debted for  the  fact  that  the  needs  of  the  government  for  gold  have  been  more 
than  doubled,  and,  strangely  enough,  as  preliminary  to  resumption.  Let  them 
be  done,  and  it  will  soon  be  found  that  the  needs,  public  or  private,  for  gold 
will  gradually  decline  until  at  length  the  greenback  and  the  gold  piece  will 
stand  on  a  level  with  each  other,  doing  this  as  a  consequence  of  an  infusion  of 
the  superior  currency  of  notes  similar  to  that  which  now  exists  in  Massa- 
chusetts, the  State  which  always  pays  gold,  because  none  of  her  citizens  need  it. 

The  course  thus  proposed  would  speedily  extinguish  the  debt,  doing  this 
by  means  of  a  saving  of  interest  consequent  upon  giving  security  of  the 
highest  order,  as  is  always  done  by  the  great  European  States.  Giving  us 
peace  it  would  inspire  a  confidence  that  would  so  stimulate  production  that 
taxation  might  soon  cease  to  exist  except  in  cases  where  its  burthens  are  scarcely 
felt.  Reducing  the  general  rate  of  interest  it  would  place  our  people  more 
nearly  on  a  level,  in  this  respect,  with  those  of  Europe,  and  thus  would  largely 
contribute  towards  giving  us  that  industrial  independence  without  which  there 
can  be  no  political  independence. 

Sincerely  hoping  that  such  may  prove  to  be  the  case,  and  begging  you  to  ex- 
cuse my  repeated  trespasses  on  your  attention,  I  remain,  with  great  regard  and 
respect,  Yours  very  truly. 

HENRY  C.  CAREY. 
GEN.  U.  S.  GRANT. 
PHILADELPHIA,  January  13,  1869. 

P.  S.  January  19. — The  Senate  Finance  Committee  has  just  now  reported  a  bill 
nominally  providing  for  resumption,  but  really  for  sacrificing  all  who  have  in- 
terest to  pay,  or  labor  to  sell,  at  the  shrine  of  those  who  have  money  to  lend  or 
labor  to  buy.  Its  true  title  would  be — "  An  act  providing  for  doubling  the  rate 
of  interest  throughout  the  country  ;  for  making  the  rich  richer  and  the  poor 
poorer;  for  bankrupting  the  people  and  the  State  ;  for  postponing  indefinitely 
a  return  to  use  of  the  precious  metals  ;  and  for  effectually  securing  repudiation 
of  the  national  debt." 


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